Research On The Status,Motivations And Countermeasures Of Disclosure Of Non-GAAP

With the continuous development and improvement of the securities market,investors’ demand for information disclosure of listed companies is no longer limited to the data in financial statements.In recent years,a large number of overseas companies have started to disclose Non-GAAP in addition to those required by accounting standards.Non-GAAP,after eliminating some of the items that have a greater impact on the fluctuation of enterprise profits but are not related to the daily operation of the enterprise,often make the enterprise’s operating performance look better and even turn a loss into a profit.Therefore,the SEC’s regulatory system for disclosure of Non-GAAP is also being gradually improved.At present,there are five A-share listed insurers trying to disclose Non-GAAP in China’s securities market.However,there are generally problems of unclear definition of indicators,incomplete information disclosure,and imperfect regulatory responses.This paper takes Ping An of China and China Pacific Insurance Group Limited as examples and adopts a case study approach to analyze the current status of disclosure of Non-GAAP and the adjustment process of specific items of these two insurers,focusing on the disclosure of operating profit and residual margin,among which residual margin is an indicator that has not been specifically studied in previous literature and is included in the scope of Non-GAAP in this paper.The paper then analyzes the motivation for the disclosure of Non-GAAP by each of the two insurers,and finally makes practical suggestions for the widespread application of Non-GAAP in China.After the research and analysis,this paper concludes that the main reasons for Ping An of China to disclose operating profit and residual margin may be the following two: to disclose the true operating performance of the company in the current period;to improve the quality of information disclosure and to enhance the predictability of future operating profit.In contrast,the reasons for disclosure of Non-GAAP by PICC mainly include two parts: to stabilize the operating performance of the enterprise and to protect the interests of small and medium shareholders.Finally,the widespread application of Non-GAAP in China requires information providers to clarify the internal explanation of Non-GAAP and the way and location of disclosure;information users to improve their knowledge base and pay attention to standard and non-standard financial indicators as well as supporting information and corporate announcements;and disclosure regulators to clearly define Non-GAAP and also include them in the scope of auditing together with the supervision of the Securities and Futures Commission.The disclosure regulator needs to clearly define Non-GAAP and include them in the scope of audits in conjunction with SEC oversight.