The unusual debate on non-GAAP reporting in the current standard practice. The lens of corporate governance

The use of non-GAAP performance measures is a widespread, and certainly not a recent, phenomenon. In fact, companies increasingly believe that non-GAAP financial measures play a critical role in their financial communication strategy, and investors often rely on a wide range of non-GAAP measures to evaluate companies’ performance. However, anecdotal evidence also highlights a misleading use of non-GAAP financial measures, these metrics being disclosed more prominently than comparable GAAP metrics, and inconsistently presented from period to period. The apparent ‘schizophrenic’ nature of non-GAAP measures has often attracted scholars’ attention, while national and international security agencies and standard setters have recently renewed their interest in this topic. Therefore, this paper reviews the nearly two decades of research on non-GAAP reporting to offer insights into what academics have learned so far about non-GAAP reporting practices. In particular, this paper analyses the main objectives of the research, the related setting under investigation, the role of non-GAAP disclosure, and the type of non-GAAP metrics, with the aim of describing the evolution of this field of research over time and providing a structured reference point to carry research forward into specific sub-areas of interest.