University of Illinois Urbana-Champaign

Equity options trading and non-GAAP earnings disclosure

Wang, Haoyan

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https://hdl.handle.net/2142/129547

Description

Title
Equity options trading and non-GAAP earnings disclosure
Author(s)
Wang, Haoyan
Issue Date
2025-04-23
Director of Research (if dissertation) or Advisor (if thesis)
Brown, Nerissa C.
Doctoral Committee Chair(s)
Brown, Nerissa C.
Committee Member(s)
  • Chen, Ciao-Wei
  • Zhu, Wei
  • Irani, Rustom M.
Department of Study
Accountancy
Discipline
Accountancy
Degree Granting Institution
University of Illinois Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
  • Informed trading
  • Voluntary disclosures
  • Options trading
  • Non-GAAP disclosures
Abstract
I investigate the influence of informed trading on the disclosure and quality of non-GAAP earnings measures in quarterly earnings releases. The results reveal that informed trading as proxied by the volume of equity options trading decreases the likelihood of non-GAAP earnings disclosure. This evidence suggests that private information gathering by informed investors supplants the need for managers to disclose adjusted measures of the firm’s core operating performance. However, when managers still choose to disclose non-GAAP earnings, I find that option trading volume is associated with higher quality non-GAAP disclosures. Specifically, I find that managers’ non-GAAP exclusions are less aggressive and are more informative to investors. My results are distinct from the effects induced by short selling and are robust to controls for endogeneity. Lastly, using a recently developed measure of risk information, I find evidence suggesting that non-GAAP exclusions are deemed risk-relevant by option traders. Thus, managers who opt to provide non-GAAP metrics are seemingly doing so to better inform investors about future firm risk.
Graduation Semester
2025-05
Type of Resource
Thesis
Handle URL
https://hdl.handle.net/2142/129547
Copyright and License Information
Copyright 2025 Haoyan Wang

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