The 52nd Frontier Forum for Digital Technology and Finance

Abstract：

We conduct analyses of non-GAAP earnings at a macroeconomic level. Our results suggest that aggregate non-GAAP earnings better predict future GDP growth than GAAPearnings However, macroeconomic forecasters do not appear to fully incorporate the information from aggregate non-GAAP earnings. Further, when examining GDP growth components separately, we document that aggregate non-GAP earnings both directly predict leading corporate profits and indirectly predict future economic activities (taxes and wages). Additional analyses reveal that the superior performance of aggregate non-GAAP earnings is due to non-GAAP earnings better reflecting firms’ core profitability and capturing managers’ private information regarding future business activities. Finally, we use a time-series decomposition to clarify why non-GAAP earnings outperform GAAP and uncover that non-GAAP earnings contain richer business cycle information while GAAP is more susceptible to short-term disturbances. Our evidence contributes to the growing literature on aggregate earnings and the macro-economy and extends prior research on firm-level non-GAAP earnings to the aggregate level.

Speaker Introduction：

Qing Zhou, Associate Professor of Finance and a doctoral supervisor at Macquarie Business School, Macquarie University. Her research spans corporate finance, banking, and climate finance, primarily examining how markets and regulations influence corporate financing and investment decisions. Her work has been published in internationally renowned academic journals such as the Journal of Corporate Finance, Journal of Banking and Finance, Journal of Empirical Finance, and Journal of Business Ethics. Dr. Zhou currently serves as the Postgraduate Director of the Department of Applied Finance at Macquarie Business School. She also holds editorial roles as an Associate Editor for the Pacific-Basin Finance Journal and Accounting and Finance, and as a Special Issue Editor for the British Accounting Review and Global Finance Journal.