Implications of Non-GAAP Financial Measures on Management Attention in Large Swiss Companies

Book excerpt: The reporting of non-GAAP financial figures is no new phenomenon. Though, in recent years, the practice of disclosing adjusted financial metrics has become increasingly popular. This paper aims to analyze the impact that alternative performance measures have on management attention in Swiss companies. The research is based on data from Thomson Reuters I/B/E/S as well as the newly available data from remuneration-reports following the implementation of Swiss legislation. It is found that adjusted performance figures manage to meet-or-beat analyst consensus significantly more frequently, indicating that management might opportunistically set adjustment amounts to beat market expectations. Furthermore, the thesis provides evidence that executive compensation is significantly dependent on the development of adjusted net income while official net income following GAAP shows no effect. This paper supports various findings of previous research and provides insight into the use of non-GAAP figures in Swiss publicly listed companies.