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<p>This study examines how a firm reports non-GAAP measures following its IPO, whether non-GAAP reporting affects post-IPO stock returns, and which GAAP or non-GAAP earnings measure investors prefer. For 1,658 IPOs completed in the U.S. between 2003 and 2020, I hand-collect non-GAAP measures from the final prospectuses and earnings announcements for the four post-IPO quarters. Firms are more likely to report non-GAAP measures when GAAP earnings are more informative, contrary to prior evidence. Post-IPO stock returns are not higher if firms report a non-GAAP measure in IPO prospectuses but are higher if firms report a non-GAAP measure at least once in the four post-IPO earnings announcements. Specifically, excluding interest, income tax and depreciation and amortization (ITDA) expenses and not separately excluding non-ITDA items from GAAP earnings has no effect on post-IPO stock returns, whereas separately excluding non-ITDA items has a positive effect. I find evidence (no evidence) that investors consider non-ITDA exclusions (ITDA exclusions) informative. The results suggest that adjusted earnings are a better non-GAAP measure than adjusted EBITDA.</p>

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Post-IPO non-GAAP reporting

  • 期刊论文

  • 发表日期：

    2025年10月18日

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  • Shuo Yang

摘要

This study examines how a firm reports non-GAAP measures following its IPO, whether non-GAAP reporting affects post-IPO stock returns, and which GAAP or non-GAAP earnings measure investors prefer. For 1,658 IPOs completed in the U.S. between 2003 and 2020, I hand-collect non-GAAP measures from the final prospectuses and earnings announcements for the four post-IPO quarters. Firms are more likely to report non-GAAP measures when GAAP earnings are more informative, contrary to prior evidence. Post-IPO stock returns are not higher if firms report a non-GAAP measure in IPO prospectuses but are higher if firms report a non-GAAP measure at least once in the four post-IPO earnings announcements. Specifically, excluding interest, income tax and depreciation and amortization (ITDA) expenses and not separately excluding non-ITDA items from GAAP earnings has no effect on post-IPO stock returns, whereas separately excluding non-ITDA items has a positive effect. I find evidence (no evidence) that investors consider non-ITDA exclusions (ITDA exclusions) informative. The results suggest that adjusted earnings are a better non-GAAP measure than adjusted EBITDA.