We specify measures of accounting consistency both across time and across firms based on the textual similarity of accounting policy footnotes disclosed in 10-K filings. We first examine how these measures relate to earnings quality. Accounting consistency over time is positively associated with a number of earnings quality proxies, including earnings persistence, predictability, accrual quality, and absolute discretionary accruals. We also find that lower consistency relative to other firms in the industry is associated with larger absolute accrual model residuals. Finally, we examine the information processing effects of accounting consistency. We find that greater accounting consistency in the time-series and the cross-section is associated with lower information asymmetry, as proxied by bid-ask spread and illiquidity. Greater cross-sectional consistency is also associated with greater analyst coverage, more accurate analyst forecasts, decreased dispersion in analyst forecasts, and stronger stock return synchronicity. Data Availability: The accounting consistency measures developed in this study are available upon request. All other data are available from the sources cited in the text. JEL Classifications: M41.

Managers have a variety of tools at their disposal to influence stakeholder perceptions. Earnings management and the strategic reporting of non-GAAP earnings are just two of the available menu choices. We explore how real earnings management and accruals management influence the probability that a company will disclose a non-GAAP adjusted earnings metric in its earnings press release and the likelihood that it will do so aggressively. We first investigate situations where managers already meet analysts' expectations either based on strong operating performance or after employing real and accruals management. We find that when solid operating performance alone allows firms to meet expectations, managers do not employ earnings management or non-GAAP reporting. However, when managers meet expectations using real and accruals management, they are significantly less likely to report a non-GAAP earnings metric. Next, we explore scenarios where companies fall short of expectations. We find that when they just miss expectations after managing GAAP earnings, they are significantly more likely to employ non-GAAP reporting, suggesting that the timing and relatively costless nature of non-GAAP reporting allows managers to appear to meet expectations on a non-GAAP basis when managed GAAP earnings fall short. Moreover, we find that companies are more likely to report non-GAAP earnings (and to do so aggressively) when (i) they are unable to use real or accruals earnings management, (ii) are constrained by prior-period accruals management, and (iii) their operating performance is poor. Taken together, our results are consistent with a substitute relation between non-GAAP reporting and both real and accruals management. La relation entre gestion du r esultat et publication d'information non conforme aux PCGR R ESUM ELes gestionnaires disposent d'une vari et e d'outils leur permettant d'exercer une influence sur la perception des parties prenantes. La gestion du r esultat et la publication strat egique * Accepted by Christine Wiedman. We thank an anonymous reviewer and the editor, Christine Wiedman, for helpful comments and suggestions. We also thank

We investigate the relation between audit committee co‐option and financial reporting quality, where audit committee co‐option is measured as the proportion of audit committee members who joined the board after the appointment of the current Chief Executive Officer (CEO). Because CEOs are often actively involved in the director nomination and selection process, we expect that higher levels of audit committee co‐option will be associated with less effective monitoring, as evidenced by more financial statement misstatements and greater absolute discretionary accruals. Consistent with our expectations, we find a positive relation between audit committee co‐option and misstatements as well as between audit committee co‐option and absolute discretionary accruals. Our findings should be of interest to regulators, investors, and other stakeholders because we provide new evidence about how potential CEO influence on director nominations and audit committee appointments impacts the effectiveness of monitoring by the audit committee.

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