Business Commons^™

The Strategic Disclosure Of Currency Headwinds And Tailwinds, Kevin Butler

Graduate Theses and Dissertations

In this study, I examine whether companies are more likely to disclose revenue growth adjusted to remove the effects of foreign currency fluctuations (constant-currency revenue growth rates) when currency fluctuations decrease revenue growth (i.e., there is a currency headwind) than when currency fluctuations increase revenue growth. Public companies increasingly cite non-GAAP performance metrics when announcing earnings. While regulators see value in non-GAAP reporting, they continue to express concern that it is carried out inconsistently and in a misleading manner. Because the disclosure of constant-currency revenue growth is discretionary, companies have an incentive to strategically disclose it only when it benefits …