Asset redeployability and non-GAAP earnings disclosure

Purpose We examine the impact of redeployable assets on non-GAAP earnings disclosure. Design/methodology/approach We use regression analysis to examine the impact of redeployable assets on non-GAAP earnings disclosure. Findings We examine the impact of asset redeployability on non-GAAP earnings disclosure using a sample of US public companies from 2002 to 2020. We find a significant and negative relation between asset redeployability and the likelihood of non-GAAP reporting. This relation is more pronounced among firms with stronger earnings performance. Additionally, a channel analysis reveals that stock price crash risk and earnings management further strengthen this negative relation. Originality/value We add to the progressing body of literature in finance and accounting that explores how asset redeployability affects firm characteristics. Additionally, our research contributes to the ongoing debate regarding whether firms decide to disclose non-GAAP earnings with an informative motive or an opportunistic motive. Our findings indicate that firms with higher asset redeployability are less likely to use non-GAAP reporting to influence public perceptions of their financial performance. This insight helps strengthen the understanding of the motives behind non-GAAP earnings disclosure. Furthermore, we are among the first, to the best of our knowledge, to directly investigate how asset redeployability influences non-GAAP earnings reporting.