# Surprise: Investors Like Non-GAAP Earnings

1 Opinion April 7, 2017 Seeking Alpha ![](/sites/default/files/styles/246w/public/assets/images/con_032228.jpg?itok=6XDJ551l) By Baruch Lev and Feng Gu > Banning non-GAAP earnings is silly-they obviously provide valuable information to investors.

Another earnings season is over, and the controversy about non-GAAP earnings-those alternative earnings numbers disclosed by companies-rages on. "Wishful thinking! Kool-Aid! Outright deception!" say the detractors. "Should have been banned by the SEC long ago!" "Not so quick," counter the supporters: GAAP earnings-those statutory performance measures calculated according to generally accepted accounting rules-no longer reflect true enterprise performance, and therefore it is incumbent upon corporate managers to set the record straight by disclosing alternative, more meaningful performance figures. Over 90% of S&P 500 companies concur: They routinely provide various non-GAAP measures of earnings, sales, and other indicators. But this widespread reporting of non-GAAP measures seems only to fire up the detractors. And thus, the controversy continues.

We wish to inform the non-GAAP debate with certain salient facts-empirical evidence-sorely missing in much of the debate. You'll be surprised by our findings. We collected a sample of 265 S&P 500 companies reporting fourth-quarter 2016 earnings, 212 of those also disclosed non-GAAP earnings. Based on this sample, we address the main criticisms of non-GAAP earnings.

Read the full article as published on [Seeking Alpha](https://seekingalpha.com/article/4060911-surprise-investors-like-non-gaap-earnings).

\_\_\_\_
*Baruch Lev is the Philip Bardes Professor of Accounting and Finance.* ## More Opinions by Baruch Lev

- [Don’t Be Fooled By Corporate Losses](https://www.stern.nyu.edu/index%2ephp/experience-stern/faculty-research/don-t-be-fooled-corporate-losses)
- [Non-GAAP Earnings: Wishful Thinking or Real Profits?](https://www.stern.nyu.edu/index%2ephp/experience-stern/faculty-research/non-gaap-earnings-wishful-thinking-or-real-profits)
- [Earnings Guidance Is Back: Oh No, Oh Yes](https://www.stern.nyu.edu/index%2ephp/experience-stern/faculty-research/earnings-guidance-back-oh-no-oh-yes)
- [Back To The Future: FASB To Reverse Goodwill Accounting](https://www.stern.nyu.edu/index%2ephp/experience-stern/faculty-research/back-future-fasb-reverse-goodwill-accounting)
- [The Rise, Fall, And Rise? Of The Conglomerates](https://www.stern.nyu.edu/index%2ephp/experience-stern/faculty-research/rise-fall-and-rise-conglomerates)