Academic Research and Issues Raised by CFOs about
Academic Research and Issues Raised by CFOs about
Corporate Reporting Beyond the GAAP Financial Statements
By Michael Gibbins and Bradley Pomeroy
School of Business, University of Alberta
Edmonton, Canada T6G 2R6
michael.gibbins@ualberta.ca
;
pomeroy@ualberta.ca
May 2007
This is a version for members of FEI Canada and others who may be interested of the paper
“Beyond-GAAP Corporate Reporting: Quality, Value and Relationship to GAAP,” which is now
under revision. The current version of the latter paper may be obtained from the authors. Thanks
to the CFOs who participated in focus groups and individual discussions in early 2006 and to
many others who provided advice, to the Canadian Institute of Chartered Accountants for
financial support, and to the Canadian Financial Executives Research Foundation for support and
encouragement. Comments from colleagues at the University of Alberta and attendees at the
2006 Research Camp of the Australian Graduate School of Management and the 2006 MPAcc
Research Conference of the University of Saskatchewan are also appreciated.
Summary of the Paper
The paper focuses on the increasingly important array of corporate reporting in addition to that in
the audited GAAP financial statements. Using views of CFOs and a study of existing academic
research, the paper explores numerous issues regarding this reporting beyond GAAP. There are
many connections between GAAP reporting and beyond-GAAP vehicles such as the MD&A,
earnings announcements, conference calls and material change reports, so while the paper
distinguishes the beyond-GAAP reporting in its analysis, the various connections are respected
and form part of the analysis foundation. Following the CFOs’ concerns, which are also present
in the research literature, the paper reviews several main topics: disclosure demand from users
(especially market participants), the relationship between GAAP and beyond-GAAP reporting,
the value of such reporting to the firms producing it, research findings about particular beyond-
GAAP vehicles, and the implications of regulatory intervention.
The research specifically on beyond-GAAP reporting is not yet extensive, so some analysis and
conclusions drawn are based on extrapolations from the more extensive research on GAAP
reporting. The paper draws several conclusions including that the value of beyond-GAAP
reporting comes both from the inability of the GAAP financial statements to satisfy either users’
needs for information or firms’ preference to transmit information relevant to their particular
circumstances, and from firms’ strategies around disclosure. Regulation appears to be helpful
only to a degree and recently increased regulatory scrutiny may be reducing information value to
users as well as motivating firms and their CFOs toward compliance rather than strategy and
value. Some important questions about the nature and value of beyond-GAAP reporting have not
yet been answered by researchers, so this paper also calls for increased study of such questions.
