Implicit Non-GAAP Earnings Guidance

Implicit Non-GAAP Earnings Guidance | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Implicit Non-GAAP Earnings Guidance Kalin Kolev, Edgar Rodriguez-Vazquez, Xiaoxi Wu This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-8339833/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract We document that implicit non-GAAP earnings guidance is widespread, comprising 41.7 percent of total (explicit and implicit) non-GAAP earnings guidance issued by S&P 1,500 firms in 2005–2021. We identify implicit non-GAAP earnings guidance through a prevalent disclosure practice—guidance on special items and recurring items (SIRI) that are often not considered part of core earnings in the absence of explicit non-GAAP earnings guidance. To validate this practice as implicit non-GAAP earnings guidance, we document that SIRI guidance, absent explicit non-GAAP earnings guidance, predicts future manager-disclosed and analyst-provided realized (actual) non-GAAP earnings. Our evidence suggests that implicit non-GAAP earnings guidance is informative to investors and that it influences the composition of analysts’ forecasted street earnings (i.e., the non-GAAP exclusions that define what constitutes street earnings). SIRI guidance not only prompts analysts to refine but also to initiate forecasted non-GAAP exclusions. Moreover, we find that implicit non-GAAP earnings guidance reflects a trade-off of potential costs and benefits. Specifically, although analysts discount (i.e., are less responsive to) SIRI guidance when it is not accompanied by explicit non-GAAP earnings guidance, implicit non-GAAP earnings guiders subsequently receive less SEC regulatory non-GAAP scrutiny. Overall, our study directs the attention of academics, practitioners, and regulators to the pervasiveness of implicit non-GAAP earnings guidance and underscores its role in firms’ forward-looking disclosures. JEL Code: M40; M41; M48 Guidance on Special Items and Recurring Items Implicit Non-GAAP Earnings Guidance Management Guidance Forecasted Exclusions SEC Monitoring Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. 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Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-8339833","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":582092493,"identity":"b0f993f9-3e35-41a4-87b2-f7d22cdd9404","order_by":0,"name":"Kalin Kolev","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAABFUlEQVRIiWNgGAWjYBACCQbmhgMMDAkMfAwMjI+hQjCQgEMLI0QLGwMDszHRWhigWtikidIi2X6w8XABQ5ocG3uPWXVBzb3E/tkNjJ95dxxm4GfPMcCmRZonseHwDIYcYzaeM2a3ZxwrTpxx5wCzNO+ZwwySPW+wapFjAGrhYahIbJNIS7vNw5aQuEEigY2Zt+0wg8EN7LbI8T+EapF/llbM8w9Jiz0OLdISYFtygLYwHwOqRLZFArsWyRkgWwzSgH5JPiw9sy/BeMaNxGbJuW3pPBJnnhVg0yJxPvnwZ56KZDl+9oONnwu+Jcj2z0g++OFtm7Ucf3vyBqyhDAaoDgDHVDMPbuU4QB3JOkbBKBgFo2DYAgCqu1vamzCOlAAAAABJRU5ErkJggg==","orcid":"","institution":"Baruch College","correspondingAuthor":true,"prefix":"","firstName":"Kalin","middleName":"","lastName":"Kolev","suffix":""},{"id":582092494,"identity":"db716b04-7d3a-48d4-92bd-ba0f714cdc37","order_by":1,"name":"Edgar Rodriguez-Vazquez","email":"","orcid":"","institution":"Baruch College","correspondingAuthor":false,"prefix":"","firstName":"Edgar","middleName":"","lastName":"Rodriguez-Vazquez","suffix":""},{"id":582092495,"identity":"f5fd23fd-8eee-4dd2-942f-934b18180c5f","order_by":2,"name":"Xiaoxi Wu","email":"","orcid":"","institution":"Bocconi University","correspondingAuthor":false,"prefix":"","firstName":"Xiaoxi","middleName":"","lastName":"Wu","suffix":""}],"badges":[],"createdAt":"2025-12-11 20:08:16","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-8339833/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-8339833/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":104438472,"identity":"6e380cef-425f-4320-bc45-b6064bd321e1","added_by":"auto","created_at":"2026-03-11 17:25:15","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":743697,"visible":true,"origin":"","legend":"","description":"","filename":"Manuscript20251211cleanv2.pdf","url":"https://assets-eu.researchsquare.com/files/rs-8339833/v1_covered_e3818495-36e5-4f17-ba41-fe4defc8b173.pdf"}],"financialInterests":"No competing interests reported.","formattedTitle":"\u003cp\u003eImplicit Non-GAAP Earnings Guidance\u003c/p\u003e","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Guidance on Special Items and Recurring Items, Implicit Non-GAAP Earnings Guidance, Management Guidance, Forecasted Exclusions, SEC Monitoring","lastPublishedDoi":"10.21203/rs.3.rs-8339833/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-8339833/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eWe document that implicit non-GAAP earnings guidance is widespread, comprising 41.7 percent of total (explicit and implicit) non-GAAP earnings guidance issued by S\u0026amp;P 1,500 firms in 2005–2021. We identify implicit non-GAAP earnings guidance through a prevalent disclosure practice—guidance on special items and recurring items (SIRI) that are often not considered part of core earnings in the absence of explicit non-GAAP earnings guidance. To validate this practice as implicit non-GAAP earnings guidance, we document that SIRI guidance, absent explicit non-GAAP earnings guidance, predicts future manager-disclosed and analyst-provided realized (actual) non-GAAP earnings. Our evidence suggests that implicit non-GAAP earnings guidance is informative to investors and that it influences the composition of analysts’ forecasted street earnings (i.e., the non-GAAP exclusions that define what constitutes street earnings). SIRI guidance not only prompts analysts to refine but also to initiate forecasted non-GAAP exclusions. Moreover, we find that implicit non-GAAP earnings guidance reflects a trade-off of potential costs and benefits. Specifically, although analysts discount (i.e., are less responsive to) SIRI guidance when it is not accompanied by explicit non-GAAP earnings guidance, implicit non-GAAP earnings guiders subsequently receive less SEC regulatory non-GAAP scrutiny. 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