Components of CEO remuneration and non-GAAP disclosure decision

Nahid Islam, John Evans, Greg White, Md Mosharraf Hossain

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)


This paper provides evidence of the effect of chief executive officer (CEO) remuneration on decisions to disclose voluntary non-generally accepted accounting principles (non-GAAP) financial measures. We investigate profit announcements that focus on the most emphasised part, which includes mandatorily identified information (results for the announcement to the market) and the least emphasised part, which incorporates other sections.By reading the profit announcements and manually collecting non-GAAP financial measures (NGFM) data,there is no reliance on keyword search strings and as such we uncover the pervasiveness of the use of NGFM. Results show that the base component of CEOs’ remuneration plays a significant role in reporting NGFM in the most emphasised part of the profit announcement. Conversely, all three (base, short-term and long-term incentives) components of the remuneration package have a significant relationship with the reporting decisions in the least emphasised part of the statement. We find that, depending on the regulatory imposition and the emphasis assigned to the section of the profit announcement, the motive for voluntary disclosure of NGFM can be explained as altruistic (informative) or opportunistic (misleading). We contribute evidence on ‘pay–action’ rather than ‘pay–performance’ by incorporating all three components simultaneously into the framework to maintain the assumption of correspondence and internal consistency among those components
Original languageEnglish
Pages (from-to)615-630
Number of pages16
JournalAustralian Accounting Review
Issue number4
Early online date26 Jun 2018
Publication statusPublished - 1 Dec 2019


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