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Vincenzo Foglia Manzillo ORCID logo, Alessandro Giannozzi ORCID logo, Gianluca Vittorioso ORCID logo, Oliviero Roggi ORCID logo

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In July 2016, ESMA Guidelines that set out principles regarding the presentation of non-GAAP measures (ESMA Guidelines on Alternative Performance Measures – APMs) became effective. The guidelines should reduce the mispricing caused by pro forma earnings, and improve investor protection and the transparency of financial information. We provide a preliminary assessment of the impact of these guidelines on 2016 reports on a sample of European Small and medium-sized enterprises (SMEs) listed on regulated markets.
Using univariate and multivariate regressions, we demonstrate a significant relationship between Alternative performance measures disclosed in the press releases and stock prices in the period after the ESMA Guidelines. APMs are relevant information for investors and more adherence to the ESMA reporting guidelines may generate a positive impact on stock prices and short-term returns.
The findings also contribute to demonstrate that the European regulation about non-GAAP measures will reduce the asymmetry of information between users, particularly between capital owners and management, which may lead to increased users’ confidence since they will be able to evaluate more effectively issuers’ performance.

Keywords: Alternative Performance Measures, Stock Prices, Value Relevance of Earnings

Authors’ individual contribution: Conceptualization – A.G.; Methodology – A.G., V.F. and G.V.; Writing – A.G., G.V. and V.F.;
Investigation – A.G. and V.F.; Supervision – O.R.

Acknowledgment: The views and opinions expressed in this paper are those of the author and do not necessarily reflect those of CONSOB.

JEL Classification: G10

Received: 04.07.2019
Accepted: 25.09.2019
Published online: 02.10.2019

How to cite this paper: Manzillo, V. F., Giannozzi, A., Vittorioso, G., & Roggi, O. (2019). Alternative performance measures: An assessment after ESMA Guidelines. Corporate Ownership & Control, 17(1), 50-59.