Persistence of non-GAAP measures and the quality of their disclosure: Evidence from Brazilian banks
DOI:
https://doi.org/10.1590/1808-057x20262380.enKeywords:
non-GAAP quality, persistence, recurring income, banksAbstract
The purpose of this article is to examine the relationship between the disclosure of qualitative information and the persistence
of non-GAAP (Generally Accepted Accounting Principles) quantitative measures of recurring income in Brazilian banks.
Previous research has primarily focused on the effectiveness of non-GAAP quantitative measures and the composition of
exclusions. However, there is a scarcity of studies addressing the quality of non-GAAP qualitative disclosures and their
influence on reported financial metrics. As the debate over regulating non-GAAP disclosures grows, this study stands
out by providing evidence from the Brazilian banking context, where non-GAAP quantitative measures are regulated
but qualitative ones are not. The results also support arguments for regulating qualitative disclosures. This study directly
benefits users of non-GAAP information and banking market regulators by showing that improving qualitative disclosures
can make quantitative metrics more useful and reliable in decision-making. The earnings persistence model was used for
31 Brazilian banks (publicly traded and privately held) that disclosed quarterly non-GAAP information from 2010 to 2023.
The qualitative information was transformed into an index for the empirical analysis.
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