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Santos, J. V. J. dos. & Isidro, H. (2026). CEO skills and non-GAAP disclosure decisions. European Accounting Review. 35 (4), 1031-1064

J. V. Santos and H. O. Isidro,  "CEO skills and non-GAAP disclosure decisions", in European Accounting Review, vol. 35, no. 4, pp. 1031-1064, 2026

@article{santos2026_1788309117573,
	author = "Santos, J. V. J. dos. and Isidro, H.",
	title = "CEO skills and non-GAAP disclosure decisions",
	journal = "European Accounting Review",
	year = "2026",
	volume = "35",
	number = "4",
	doi = "10.1080/09638180.2026.2614689",
	pages = "1031-1064",
	url = "https://www.tandfonline.com/journals/rear20"
}

TY  - JOUR
TI  - CEO skills and non-GAAP disclosure decisions
T2  - European Accounting Review
VL  - 35
IS  - 4
AU  - Santos, J. V. J. dos.
AU  - Isidro, H.
PY  - 2026
SP  - 1031-1064
SN  - 0963-8180
DO  - 10.1080/09638180.2026.2614689
UR  - https://www.tandfonline.com/journals/rear20
AB  - Using a novel measure of managerial skill based on CEOs’ functional expertise, we find that our CEO skills measure is positively associated with both the likelihood and quality of non-GAAP disclosures. Firms led by highly skilled CEOs are more likely to follow the European Securities and Markets Authority (ESMA) guidelines for transparent non-GAAP reporting. Specifically, CEOs with broader skill sets tend to exclude items from GAAP earnings more consistently over time when calculating their non-GAAP numbers, report non-GAAP information even when the GAAP earnings surprise is small, provide numerical reconciliations between GAAP and non-GAAP earnings, give higher emphasis to GAAP earnings, use non-GAAP earnings less to meet or beat analysts’ forecasts, and exclude fewer recurring items in their non-GAAP calculations. Among 20 managerial skills, expertise in accounting and finance, corporate governance, and company experience are the skills most strongly linked to transparent non-GAAP disclosure practices. These results are robust across several strategies to mitigate endogeneity, including instrumental variable approaches, CEO turnover analysis, a macroeconomic event, and controlling for managerial ability. Our results highlight the importance of individual managerial skills in influencing voluntary disclosure.
ER  -