The effect of compensation and board quality on non-GAAP

The effect of compensation and board quality

on non-GAAP reporting decisions

Helena Isidro

ISCTE IUL Business School

Av das Forccedilas Armadas 1649-026 Lisboa Portugal

HelenaIsidroisctept

Ana Marques

NOVA School of Business and Economics

Campus de Campolide 1099-032 Lisboa Portugal

ana_marquesnovasbept

May 2011

The authors appreciate the valuable comments received at the 2011 IAS mid-year meeting and at the 2011 European

Accounting Association annual congress This research was supported by the Foundation for Science and

Technology in Portugal (grant PTDCEGE-GES1037702008) Ana Marques‟ research was also supported by a

Marie Curie International Reintegration Grant within the 6th

European Community Framework Program We are

grateful for the excellent research assistance of Arash Aloosh

Corresponding author Tel +351918080250

1

The effects of compensation and board quality


Abstract

This study reports international evidence on the impact of compensation and board

quality on the voluntary disclosure of non-GAAP earnings numbers We find that compensation

contracts linked to firm performance are associated with a higher probability of disclosure of

non-GAAP figures in the earnings announcement‟s press release Furthermore when this type of

compensation is used firms tend to report non-GAAP figures in the title of the press release

make more adjustments for recurring items and avoid reporting reconciliations We also show

that an efficient governance structure of the board of directors can help restrain these

discretionary disclosure decisions regarding non-GAAP reporting

Key words non-GAAP financial measures pro forma earnings compensation

corporate governance

2

1 Introduction

Financial reporting rules on both sides of the Atlantic allow firms a considerable level of

discretion on how to report their financial performance to external users of financial information

Some of the performance measures reported follow generally accepted accounting principles

(GAAP) and are disclosed in audited financial reports while others are ad-hoc measures prepared

by managers that do not follow GAAP These last measures are often denoted as ldquonon-GAAPrdquo

ldquopro formardquo or ldquoalternative performancerdquo measures Managers argue that reporting non-GAAP

disclosure helps to convey relevant information about firm performance to the users of financial

information On the other hand critics of non-GAAP reporting suggest that firms use non-GAAP

disclosures opportunistically in an attempt to influence users‟ perception about their financial

performance

The use of non-GAAP information to signal or to manipulate the perception of firm

performance depends on incentives and corporate controls When compensation is linked to

firm‟s performance managers face stronger incentives to influence voluntary disclosures in an

opportunistic way (Bamber et al 2010) as this can lead to an appreciation of the market value of

firms‟ shares Conversely when corporate governance mechanisms are efficient there should be

less opportunistic use of non-GAAP disclosures For example the independence of outside

directors (Frankel et al 2011) and the presence of institutional investors (Jennings and Marques

2011) have been found to decrease opportunistic non-GAAP reporting

We investigate the impact of compensation incentives and the governance practices of the

board of directors on the following reporting practices usually associated with opportunistic

reporting (eg Doyle et al 2003 Bowen et al 2005 Elliott 2006 Black and Christensen 2009

3

Marques 2010 Zhang and Zheng 2011) (i) the decision to disclose non-GAAP earnings

measures in annual earnings announcements (ii) the decision to make adjustments for recurring

items to GAAP figures to calculate non-GAAP earnings (iii) the prominence given to these

measures in the press release and (iv) the decision to disclose a reconciliation justifying

differences between non-GAAP earnings and the corresponding GAAP measure These four

decisions may be used by firms in a discretionary way potentially misleading investors and

diminishing the efficient functioning of capital markets In fact Howard Scheck chief

accountant at the Securities and Exchange Commission‟s Division of Enforcement has recently

named the disclosure of non-GAAP figures as a ldquofraud risk factorrdquo (Leone 2010) Strong

corporate controls translated into better board quality can help counteract the opportunistic use

of these non-GAAP disclosures

We perform our tests using a set of European firms as research on non-GAAP

disclosures outside the US is still scarce and the lack of strict rules on non-GAAP reporting in

Europe makes the European environment more prompt to the opportunistic use of non-GAAP

information1 Concerns about the discretionary use of non-GAAP information have been recently

voiced by European entities such as the EFRAG ndash the European Financial Reporting Advisory

Group The group analyzed a small sample of firms and discovered that (i) non-GAAP measures

disclosed were calculated differently by different firms and (ii) the adjustments made vary not

only among firms but also sometimes over time and conclude that ldquoan element of personal

preferencerdquo may also be involved Hence our findings can inform regulators about the

effectiveness of internal incentives and controls over non-GAAP reporting and consequently

assess the need for regulation regarding non-GAAP reporting

1 Some of the firms in our sample are also listed in the US and therefore subject to US non-GAAP rules

(Regulation G) We control for this fact in our empirical analysis

4

Our sample is drawn from the Financial Times 2006 list of the 500 largest European

firms After eliminating all financial firms and utilities and considering missing data issues our

final sample consists of 805 firm-year observations for fiscal years 2003 2004 and 2005 For

each firm we gather non-GAAP data directly from the annual earnings press release This

ensures us that we have information on all disclosures made by managers and that the numbers

collected are indeed the ones that managers decided to disclose (without need of use of a proxy

such as analysts‟ actual earnings figures) The data reveals that non-GAAP disclosures are very

common in Europe and that most of the non-GAAP figures are higher than the GAAP

comparable measures which is consistent with US disclosures and can be seen as an indication

of an interest to influence investors‟ perceptions (Bhattacharya et al 2003)

Our empirical results indicate that when compensation is linked to firms‟ performance the

propensity to disclose non-GAAP earnings significantly increases even after controlling for

other firm determinants of non-GAAP disclosure previously identified (eg Lougee and

Marquardt 2004 and Isidro and Marques 2010) This finding suggests that the market reacts to

non-GAAP earnings and firms are aware of this and interested in reaching higher price levels2

As expected we also find that good corporate governance translated into an efficient board of

directors reduces the propensity to disclose non-GAAP figures

Regarding managers‟ adjustments to GAAP earnings we observe that firms adjust for

recurring items (RampD expenses depreciation expenses stock-based compensation and tax-

related values) more often when compensation contracts are linked to market performance

However board quality does not counteract this effect This may be because the board does not

have detailed information on how recurring the items excluded can be

2 An alternative explanation is that non-GAAP measures are also used in compensation contracts Our data does not

allow us to explore this alternative explanation

5

We next analyze whether compensation influences the positioning of the non-GAAP

financial measures The emphasis given to these measures in the press release has been shown to

affect investors‟ perception of firms‟ performance (eg Elliott 2006) and thus firms may

intentionally give more prominence to non-GAAP measures We observe that the majority of

firms give higher emphasis to non-GAAP information than GAAP information in the press

release which suggests an opportunistic behaviour It also shows that firms do not follow the

recommendation of the Committee of European Securities Regulators (CESR) the European

market regulator to present non-GAAP measures in a less prominent way than GAAP measures

More importantly we find a higher probability of presenting non-GAAP measures in the title of

the press release when managers‟ compensation is linked to the firm‟s market performance The

quality of the board of directors seems to reduce the practice of reporting non-GAAP measures

in a more prominent location of the press release This suggests that if firms use the positioning

of non-GAAP figures in the press release with the intent to boost investors‟ perception of firm

performance a strong monitoring mechanism can limit that practice

Finally we find there is a higher probability of firms not disclosing information that

permits investors to reconcile non-GAAP with GAAP earnings when compensation is associated

with performance However board quality has no significant influence on this reporting

decision

This paper adds to two streams of literature corporate governance and non-GAAP

reporting To our knowledge only one other paper studies the association between compensation

and non-GAAP reporting Black et al (2011) The authors contend that compensation contracts

can either encourage or discourage opportunistic reporting of non-GAAP measures depending

on the horizon of the contracts We provide evidence that compensation tied to market

6

performance creates incentives to engage in non-GAAP disclosures that are consistent with

opportunistic reporting We also show that efficient internal governance mechanisms can help

mitigate some of the opportunistic reporting practices Our findings add to previous research

showing that board independence curbs opportunistic non-GAAP disclosures (Frankel et al

2011 Jennings and Marques 2011) Our results can assist European regulators and other users

interested in judging whether good governance practices at the board level are sufficient in

reducing opportunistic use of non-GAAP information (and thus substitute regulation)

The paper is organized as follows The next section presents the hypotheses development

and discusses the relevant prior literature The third section describes the data and sample

Section four outlines the research design and reports the descriptive statistics Section five

presents the empirical results on the association between compensation board quality and non-

GAAP reporting decisions The last section concludes the study

2 Hypotheses development

While some academic research presents evidence consistent with managers‟ claims that

non-GAAP measures convey relevant information to investors about core earnings (eg

Bhattacharya et al 2003 and Brown and Sivakumar 2003) other studies suggest that firms use

non-GAAP disclosures in an attempt to pass a more favorable impression of performance (eg

Doyle et al 2003 Bowen et al 2005 Black and Christensen 2009 Isidro and Marques 2010)

Possibly both types of situations co-exist in markets We do not argue that non-GAAP

disclosures are always opportunistic Nor do we try to identify those that are opportunistic What

we do is to analyze two mechanisms (compensation contracts and governance quality) that are

likely to affect firms‟ opportunistic non-GAAP reporting

7

21 Performance-based compensation and non-GAAP reporting decisions

Agency theory indicates that performance-based compensation is a way to align

managers and shareholders interests (eg Jensen and Murphy 1990) Performance-pay incentives

can encourage managers to increase shareholders wealth but can also create incentives to

manipulate financial information (eg Holthausen et al 1995) Aboody and Kasznik (2000)

document changes in share prices and analyst earnings forecasts around option awards

suggesting that CEOs manage investors‟ expectations around award dates by delaying good news

and rushing forward bad news The authors suggest ldquothat CEOs make opportunistic voluntary

disclosures that maximize their stock options compensationrdquo Although compensation is not

usually linked to non-GAAP numbers non-GAAP disclosures can be used opportunistically to

enhance the market valuation of the firm and thus increase performance-based compensation

In a recent paper Black et al (2011) find an association between opportunistic non-

GAAP disclosures and compensation contracts They show that in the US compensation

contracts can mitigate opportunistic non-GAAP reporting but only if they include a long-term

performance plan for top management The authors suggest that bonus compensation that

focuses on short-term performance is likely to encourage opportunistic non-GAAP reporting We

are interested in investigating whether the association between non-GAAP reporting practices

and managers‟ compensation exists outside the US context where there are no strict rules on

non-GAAP disclosures and investors react differently to non-GAAP information (eg Anderson

and Hellman 2007) Based on prior evidence we hypothesize that performance-based

compensation motivates firms to engage in opportunistic non-GAAP reporting in order to

increase the short-term value of their bonuses and stock options

8

We rely on previous research to identify non-GAAP reporting decisions that are likely to

indicate opportunistic behavior Specifically we consider four reporting decisions (i) whether or

not to disclose a non-GAAP earnings figure in the earnings announcement press release (ii) the

exclusion of recurring items from GAAP numbers when calculating a non-GAAP measure (iii)

the prominence given to the non-GAAP measures in the press release and (iv) the disclosure or

not of reconciliation between GAAP earnings and the non-GAAP figures

The first decision that we consider is whether managers disclose a non-GAAP measure in

the press release or not While the disclosure may be motivated by altruistic reasons the fact

that non-GAAP typically portrays better performance than GAAP suggests that a disclosure can

be used for opportunistic reasons In fact the objective of CESR‟s 2005 recommendation is ldquoto

ensure that investors are not misled through the use of alternative performance measuresrdquo As

compensation linked to performance can encourage voluntary disclosures that boost firms‟

market performance we expect a positive association between manager compensation and a non-

GAAP disclosure decision We state part A of our first hypothesis as follows

H1A The propensity to disclose non-GAAP earnings in earnings announcements‟ press

releases is higher when compensation is linked to the performance of the firm

The second decision studied is the type of adjustments firms do to GAAP earnings Firms

typically exclude from GAAP earnings expenses such as extraordinary items which they claim

to be non-recurring But empirical research shows that firms also exclude recurring expenses

such as depreciation stock-based compensation and research and development and that this

practice is associated with opportunistic motives (eg Black and Christensen 2009) We expect

9

that firms where compensation is linked to performance to make adjustments for recurring items

more frequently than others when calculating their non-GAAP figures We define hypothesis 1B

as indicated below

H1B The probability of firms adjusting GAAP earnings for recurring items when

calculating their non-GAAP figures is higher when compensation is linked to

performance

The third decision we analyze is what prominence firms give to non-GAAP earnings

numbers in the press release Paragraph 29 of CESR‟ recommendation on alternative

performance measures states ldquoit can be observed that issuers tend to present alternative

performance measures sometimes even more prominently that the defined measuresrdquo In order to

ensure that investors are not misled the committee recommends that non-GAAP measures are

given less prominence than GAAP earnings figures In the US literature on the emphasis given

to non-GAAP figures indicates that managers give more prominence to these metrics when they

portray better firm performance than GAAP numbers (Bowen et al 2005 Elliott 2006 Allee et

al 2007) Based on this literature we expect that firms where compensation is tied to

performance to give higher emphasis to non-GAAP figures and thus part C of our first

hypothesis is as follows

H1C The prominence given to non-GAAP figures in the press release is higher when

compensation is linked to the performance of the firm

10

The fourth decision that we investigate is whether firms choose to disclose a

reconciliation between non-GAAP and GAAP numbers in the press release or not Elliott‟s

(2006) experimental results indicate that the effects of prominence of non-GAAP financial

measures in earnings announcements can be mitigated by including a reconciliation Marques

(2010) shows that reconciliations are informative to investors even after controlling for the

information content of other financial statements Furthermore Zhang and Zheng (2011) find

that before regulation G was put in place in the US the mispricing of non-GAAP earnings

existed only in firms that did not disclose a tabular reconciliation These findings suggest that

market participants‟ can interpret the adjustments made by managers and reflect them on their

decisions if the necessary information is provided Thus if firms are interested in altering users‟

perceptions of their earnings (maximizing stock compensation) we would expect them not to

disclose a reconciliation in the earnings announcements‟ press releases even though CESR‟

recommendation states that firms should ldquodefine the components included in an alternative

performance measurerdquo (paragraph 22) and explain the differences between GAAP and non-

GAAP figures which ldquomight be through a reconciliationrdquo (paragraph 25) This results in part D

of our first hypothesis

H1D The probability of not disclosing a reconciliation between non-GAAP and GAAP

earnings is higher when compensation is linked to the performance of the firm

22 Board quality and non-GAAP reporting decisions

Corporate governance mechanisms that limit opportunistic management behavior benefit

all stakeholders (Ashbaugh-Skaife et al 2006) As a result of less opportunistic reporting

11

strategies better governed firms tend to make more informative disclosures (Beekes and Brown

2006) Furthermore when good practices are in place corporate governance mechanisms can

counterbalance the weakness of regulation (Klapper and Love 2004) The intuition according to

Durnev and Kim (2005) is that good corporate governance ldquoplays a more important role in

alleviating the harmful effects of ineffective legal framework when regulation is weakrdquo Thus

we expect good governance practices to be particularly important in preventing opportunistic

non-GAAP reporting in Europe as there is no regulation Given that the board of directors is the

central internal control mechanism for monitoring managers (Fama 1980) we focus the analysis

of the effect of corporate governance on non-GAAP opportunistic reporting on the quality of the

board

To the best of our knowledge there are only two papers that analyze the effect of boards

on non-GAAP disclosures Frankel et al (2011) and Jennings and Marques (2011) both using

US data These studies analyze only one characteristic of the board the independence of its

members Their results indicate that independence of outside directors is associated with better

non-GAAP disclosures We extend these findings by measuring board quality via a score of

board characteristics as literature has established independence to be one important factor of the

efficiency of the board but not the only one The use of scores is common practice in the

corporate governance literature as it allows to take into the consideration the complexity and the

interactions of governance systems (eg Gompers et al 2003 Brown and Caylor 2006

Bebchuck et al 2009 Aggarwal et al 2009) In our score we consider independence and among

other things that busy boards are associated with weak corporate governance (Fich and

Shivdasani 2006) by evaluating attendance that when the CEO also holds the position of the

chairman of the board internal control systems may fail (Jensen 1993) due to the concentration

12

of decision management and decision control in one individual and that the independence of

committees is also important (Karamanou and Vafeas 2005) We expect to find a negative

association between our board quality score and the proxies for opportunistic reporting practices

indicating that better governed firms make more informative non-GAAP disclosures We divide

the hypothesis linked to board quality in four parts as follows


releases is lower when the board of directors follows more desirable corporate

governance standards


calculating their non-GAAP figures is lower when the board of directors follows more

desirable corporate governance standards

H2C The prominence given to non-GAAP figures in the press release is reduced when

the board of directors follows more desirable corporate governance standards


earnings decreases when the board of directors follows more desirable corporate


3 Data and sample

13

We begin our sample selection process with all firms included in the Financial Times

2006 classification of the 500 largest European firms which is based on the 2005 financial

reports The selection criteria results in a sample of large firms that are followed carefully by all

agents in the financial markets We eliminate from the sample financial institutions and utilities‟

firms as these are subject to specific regulations After removing firms-years with missing press

releases the sample comprise 805 observations representing 318 firms from 20 European

countries for the period 2003 to 2005 For every one of these firm-years we obtain financial data

from WorldscopeDatastreamIBES For data on managers‟ compensation and board

characteristics we rely on the data provided by Institutional Shareholder Services (ISS) The data

on ownership is collected from LionShares

We hand-collect non-GAAP information from press releases of the annual earnings

announcements which are obtained via Factiva or the firms‟ websites We collect information

about the manager-adjusted non-GAAP financial measures from the press release in order to

obtain the most accurate information about managers‟ disclosures To be conservative when the

label given to the earnings measure was dubious we did not consider these as non-GAAP

financial measures3 We also hand-collect whether or not the firms disclose a reconciliation

Given that the CESR does not recommend the use of a tabular reconciliation we consider that

firms disclose a reconciliation if information about the adjustments is presented even if this is

part of the text of the press release

When reading the annual earnings announcements‟ press releases it became clear that the

voluntarily disclosure of non-GAAP financial measures was widespread in European firms An

analysis of the data collected reveals that in all industries the majority of the firms disclose non-

3 It is also important to take into consideration that we only collect non-GAAP measures that in some way portray a

firm‟s results (ie all sorts of earnings numbers) Thus we ignore measures related with other aspects of a firm‟s

performance (sales for example)

14

GAAP measures (Table 1 Panel A)4 In fact 80 of the press releases include at least one non-

GAAP earnings figure This practice is more prevalent in manufacturing materials and

electronics and transportation and communication though

Panel B of Table 1 indicates that GAAP earnings are often adjusted for items that are

considered recurring such as RampD expenses depreciation expenses stock-based compensation

and tax-related values (63 of observations) That practice is common across all industries

Further we calculate how many of the non-GAAP numbers are a result of adjusting for revenue

items instead of expenses (ie cases where the non-GAAP number is lower than the GAAP

figure) We find that this happens in only 11 of the non-GAAP disclosures

Disclosing firms typically report non-GAAP earnings measures in a more prominent

location of the press release than GAAP earnings figures (Table 1 Panel C) In fact firms give a

higher emphasis to non-GAAP earnings in 83 of the cases where such a number is present in

the press release As non-GAAP earnings figures are usually higher than the corresponding

GAAP figures this evidence suggests an intention to depict a better picture of firms‟

performance which can lead to higher compensation5 The most common location where

managers disclose non-GAAP earnings is the area of subtitles or highlights of the press release

ie right after the title and before the text Furthermore the emphasis given to non-GAAP

figures varies significantly across industries

Panel D of Table 1 shows the percentage of firms that disclose a reconciliation in their

press release given that a non-GAAP disclosure was made Our findings indicate that in

approximately 66 of the cases firms choose to disclose some kind of reconciliation between the

non-GAAP measures and the corresponding GAAP figures This means there are still firms that

4 Industry classification is based on the two-digit SIC codes

5 This evidence should be interpreted with caution as most of the adjustments to GAAP earnings are income-

decreasing (Hitz 2010)

15

do not follow the CESR recommendation of defining the components included in their

alternative performance measures Further analysis reveals that only 36 disclose a tabular

reconciliation

ltInsert table 1 heregt

Finally we calculate the percentage of the sample firms that simultaneously adjust for

recurring items and give a higher prominence to non-GAAP earnings measures than to GAAP

earnings figures in the press release as these practices can easily be classified as misleading

Untabulated results indicate that over 60 of firms adjust for recurring items while at same time

give more emphasis to non-GAAP numbers Although this descriptive evidence seems to

indicate the existence of many cases of opportunistic reporting of non-GAAP it is still possible

that some firms do report non-GAAP to transfer private information to the market These

observations if they exist will work against us finding results which support our expectations

4 Research design and descriptive results

Our hypotheses assess the effect of compensation and board quality on firms‟ non-GAAP

reporting decisions that are likely to indicate opportunistic reporting This association is studied

using the following model

Non-GAAP reporting decision =

f (Compensation + Board quality + Other firm incentives)

16

We measure the dependent variable non-GAAP reporting decision in four alternative

ways in accordance with the hypotheses presented in section 2 Firstly we consider whether or

not a firm discloses a non-GAAP measure in the annual earnings announcement press release In

this case function f takes the form of a logistic regression where the dependent variable is non-

GAAP disclosure an indicator variable coded as one when the firm reports non-GAAP figures in

the earnings announcement press release and zero otherwise

Secondly we study the choice of adjustments made to GAAP earnings in the calculation

of non-GAAP figures Recurring adjustments is an indicator variable taking the value of one if

the firm excludes from GAAP earnings recurring items such as RampD expenses depreciation

expenses stock-based compensation items and tax-related and zero otherwise In this case

function f takes the form of a logistic regression

Thirdly we look at the emphasis given to the first non-GAAP measure disclosed - the

categories used in the classification of the variable non-GAAP emphasis are as follows (1) title

(2) subtitle or highlights (3) first or second paragraph (4) third paragraph or lower In this case

the function f takes the form of a multinomial logistic regression where the dependent variable is

coded as one two three or four according to the emphasis given and five otherwise (ie when

the non-GAAP measure is disclosed in a less prominent location of the press release near the

financial statements or no non-GAAP measure is disclosed)6

Lastly we analyze whether managers disclose information regarding the reconciliation

between non-GAAP earnings and the corresponding GAAP measure (in a tabular format or

through written explanations) To be consistent with the previous analyses where we expect the

voluntary reporting decision to be positively (negatively) associated with compensation (board

6 Category five joins the cases where non-GAAP figures are disclosed in the financial statements and the cases

where no non-GAAP numbers are disclosed as in some countries (eg Spain) financial statements have rigid

formats leaving no room for non-GAAP measures This is mentioned in Appendix 1 of the 2009 EFRAG report

17

quality) we define NoReconciliation in the negative way ie as an indicator variable coded as

one if the firm does not report a reconciliation between non-GAAP and the corresponding GAAP

earnings measure in the annual announcement‟ press release and zero otherwise The function f

takes the form of a logistic regression

Compensation is an indicator variable coded as one when directors receive all or a part of

their fees in stock and options grants which are aligned with the firm market performance7

Board quality is a score combining 11 board attributes defined in Aggarwal et al (2009)8 For

each of the 11 board characteristics considered a value of one is assigned whenever the board

attribute is present and a value of zero is attributed otherwise Then all the attributes‟ values are

added to form a board quality score Table 2 presents the percentage of observations where the

criteria used to measure board quality and managers‟ compensation are met The CEO is not the

chairman of the board in more than 90 of the cases there is no former CEO on the board in

835 of the cases and the CEO does not have related-party transactions in 678 of cases On

the other hand the attendance of most board meetings is relatively low (in only 354 of cases

all directors have attended at least 75 of the meetings) The independence of board committees

also varies Compensation committees are predominantly independent but audit committees have

only a majority of independent members in 86 of the cases Regarding compensation we find

that in 606 of the firm-years directors receive all or a portion of their fees in stock and option

grants that are aligned with the firm‟s market performance Thus performance-based

compensation is a wide-spread practice in our sample

7 We recognize that a continuous variable (as the percentage of total compensation that is paid in stock and options

grants which are aligned with company market performance) might be more informative than an indicator variable

However we were unable to find such information for the sample firms 8 Aggarwal et al (2009) consider 25 board attributes and 10 compensation and ownership attributes We included

only 11 attributes in our score because the remaining attributes are coded missing for more than one quarter of the

sample

18


Other firm incentives refer to firm specific characteristics that affect non-GAAP reporting

choices We consider the following disclosure incentives The proportion of institutional and

insider ownership as a strong presence of these shareholders reduces the need for public

voluntary disclosures (eg Schadewitz and Blevins 1998 and Eng and Mak 2003)9 Consensus

beating (indicator variable coded one if non-GAAP earnings meet or beat the analysts‟ consensus

forecast and GAAP earnings do not and zero otherwise) and analyst following (log of the

number of analysts following the firm) proxy for the influence of financial analysts on non-

GAAP reporting Following previous studies on the determinants of non-GAAP disclosures (eg

Lougee and Marquardt 2004 and Marques 2006) we also include the proportion of intangibles

(intangibles to total assets) special items (indicator variable coded as one if the firm reports

special items and zero otherwise) earnings variability (standard deviation of earnings to assets in

the previous three fiscal years) size (log of market value) and leverage (debt to total assets)

Finally we control for firms that cross-list in US markets as these firms are subject to strict

regulations regarding non-GAAP disclosures (Regulation G)

Table 3 reports descriptive statistics on the financial characteristics of the sample used in

the multivariate analysis A comparison of the first two lines of Table 3 Panel A reveals that the

mean of non-GAAP EPS is 367euro while the mean of the GAAP EPS is just 271euro10

This result is

in line with findings of other studies as firms tend to adjust their GAAP figures mainly by

9 Insider ownership considers ownership positions held by non-buy-side entities such as officers directors public

and private companies and ESOPs Thus it includes managers families financial institutions and other firms 10

Sometimes firms disclose more than one non-GAAP earnings figure in their press release When that happens we

use the first non-GAAP figure disclosed by the firm (ie the one to which more emphasis is given in the press

release) to calculate the mean non-GAAP EPS

19

excluding expenses which leads to non-GAAP figures higher than the comparable GAAP

number This practice has caused concerns among regulators and investors as often it leads to the

presentation of a positive non-GAAP earnings number while the corresponding GAAP earnings

figure is in fact a loss IOSCO (the International Organization of Securities Commission) issued

a cautionary statement in 2002 where it stated problems arise if non-GAAP measures are used in

such a way ldquoas to obscure the financial results determined according to GAAP or provide and

incomplete description of true financial resultsrdquo

On average institutional investors hold 28 of the firms‟ shares and insider investors

hold 23 of the shares The average sample firm is followed by 17 analysts (corresponding to a

log of 402) has market capitalization around 14500 thousand Euros (a log of 884) and a debt

to assets ratio of 28 Panel B of Table 3 reports frequencies for the discrete variables In

approximately one third of the cases non-GAAP earnings is higher than analysts‟ forecasts while

GAAP earnings measures show that the firm does not meet the consensus Some of the sample

firms are cross-listed in US markets (36) and most report special and extraordinary items

(854)


Table 4 presents the Pearson correlation matrix for the variables included in our

multivariate analysis Results indicate that performance-based compensation is positively

correlated with the decision to make a non-GAAP disclosure and the decision to not disclose

reconciliation information between non-GAAP and GAAP measures These correlations suggest

that compensation is an important determinant of non-GAAP disclosure decisions Apart of

20

compensation the decision to disclose a non-GAAP figure is associated with analyst attention to

the firm (ie number of analysts following and beating analyst earnings forecasts) insider

ownership the level of intangibles and the existence of special items As expected firms‟

adjustments to GAAP earnings are positively correlated with intangibles (which include

goodwill) and special items We also find a positive correlation between the fact that firms make

adjustments for recurring items and insider ownership and special items and a negative

correlation between this and institutional ownership and cross-listing in the US Finally the

emphasis given to non-GAAP information in the press release is positively correlated with

intangibles and the fact that non-GAAP numbers beat the analysts‟ target and negatively

correlated with insider ownership


5 Results on the association between compensation board quality and non-GAAP

reporting decisions

Table 5 presents the empirical results of our study of the relation between compensation

board quality and the decision to disclose non-GAAP earnings measures The first estimation of

the logit model (column 1) considers only the impact of compensation on the disclosure decision

the second estimation of the logit model (column 2) considers the impact of board quality by

itself and the third set of results (column 3) considers the two factors concurrently The two

coefficients estimated for performance-base compensation are positive and statistically

significant (columns 1 and 3) This result supports hypothesis 1A as the propensity to disclose

non-GAAP earnings in earnings announcements‟ press releases is higher when compensation is

21

linked to the market performance of the firm Consistent with hypothesis 2A the estimated

coefficients for board quality are negative and statistically significant (columns 2 and 3) That is

the probability of reporting discretionary non-GAAP measures is lower when the board of

directors follows more desirable corporate governance standards Thus while compensation

contracts linked to performance can encourage firms to disclose non-GAAP measures

opportunistically (and in ways that can mislead investors) effective boards can counteract this

effect

The results for the other firm factors are in line with previous academic findings Both

measures of ownership are negative and statistically significant in the three specifications of our

model This supports the idea that a higher level of institutional ownership is associated with less

disclosure of non-GAAP figures that might be opportunistic (Jennings and Marques 2011)

Given that in Europe capital is traditionally less dispersed and family firms are still prevalent

there is less need for voluntary public information while at the same time there is closer

monitoring over managers‟ actions This is consistent with our findings for insider ownership

The results for consensus beating suggest that managers use the disclosure of non-GAAP figures

to appear to meet or beat analyst earnings benchmarks (as documented in Black and Christensen

2009 and Isidro and Marques 2010)


Table 6 presents the results of the analysis of the association between compensation

board quality and the adjustment for recurring items in firms‟ calculation of non-GAAP earnings

measures Black and Christensen (2009) find that managers opportunistically exclude from

22

GAAP earnings recurring items such as RampD expenses depreciation expenses stock-based

compensation items and tax-related charges Our estimation shows that in the two models where

compensation is included (columns 1 and 3) the coefficients are positive and statistically

significant suggesting that in firms where compensation is tied to market performance there is a

higher probability of adjusting GAAP earnings for items that are recurring This is consistent

with hypothesis 1B We find no impact of board quality on the propensity to adjust for recurring

items Thus we are unable to reject the null hypothesis on the case of hypothesis 2B This may

be because the board does not have detailed information on how recurring the items excluded

can be Institutional shareholders and insiders seem to have a disciplinary effect of the

adjustment for recurring items as both sets of estimated coefficients (columns 1 and 3) are

negative and statistically significant

As a robustness check we also run an OLS model where the dependent variable is the

total value of the adjustments made ie non-GAAP earnings per share minus GAAP earnings

per share This is a weaker test of our hypothesis as the variable may also include adjustments

for items that are in fact non-recurring (and thus justifiable) Non-tabulated results for this

specification are consistent with those presented in Table 6 suggesting that compensation is an

important motive for opportunistic reporting of non-GAAP information11

lt Insert table 6 heregt


board quality and the emphasis that managers give to non-GAAP earnings measures in the press

11

Consistent with this being a weaker test of managers‟ intentions the estimated coefficients have a lower level of

statistical significance

23

release As before the first estimation of our model considers the impact of compensation on the

disclosure decision the second estimation considers the impact of board quality and the third set

of results considers the two factors concurrently Given that this analysis is performed using a

multinomial logistic regression we divide the table into 4 panels each one corresponding to a

specific position of the non-GAAP measures in the earnings announcement press release

Panel A which analyzes non-GAAP disclosures in the title of the press release shows

that the estimated coefficient for our compensation variable is positive and statistically

significant That is when compensation is linked to the performance of the firm the non-GAAP

earnings measure disclosed is in the title of the press release more often as compared to

reporting it in the financial statements (the part of the press release not considered in any panel)

or not reporting it at all However compensation does not affect the positioning of non-GAAP

measures significantly in any other part of the press release This result suggests that when firms

position their non-GAAP measures strategically they tend to include it in the title of the press

release which is consistent with firms giving more emphasis to non-GAAP measures whenever

they have a strategic reason for doing so This practice can have an important impact in financial

markets as price reactions to earnings announcements tend to be higher when the non-GAAP

number is placed first in the press release particularly from less-sophisticated investors (Allee et

al 2007)

The results for board quality reveal that this variable is negatively associated with the

emphasis given to non-GAAP measures in all panels when considered independently from

managers‟ compensation (column 2) This is consistent with our hypothesis 2C When

considered concurrently with managers‟ compensation (column 3) the estimated coefficients for

board quality remain negative and statistically significant except in Panel B where the

24

coefficient although negative is not statistically different from zero Given that in the third

model of panel A where the two measures are considered concurrently compensation has a

positive and significant effect while board quality has a negative and significant effect we

conclude that board quality can reduce opportunistic emphasis given to non-GAAP disclosures

motivated by compensation For economy of space we do not tabulate the results for the other

firm factors but these are consistent with previous findings

ltInsert Table 7 heregt

Our last set of hypotheses (1D and 2D) states that the non disclosure of a reconciliation

between non-GAAP and GAAP earnings is more (less) likely when compensation is linked to

firm performance (when the board of directors follows more desirable corporate governance

standards) Estimation results presented in Table 8 indicate that performance-based

compensation contracts seem to restrain the disclosure of information that allows users of

financial statements to reconcile non-GAAP to GAAP earnings As firms tend to make higher

adjustments to GAAP figures when compensation is aligned with firm performance avoiding the

disclosure of detailed information about the adjustments made helps to portray a better picture of

firm performance However our results also indicate that board quality does not impact on the

decision to provide reconciliation information

A caveat of our reconciliation results is that in certain regimes providing reconciliations

is not a voluntary decision but a requirement imposed either by accounting or market rules For

example in the UK Financial Reporting Standard 3 (Accounting Standards Board 1993)

requires alternative earnings per share figures to be reconciled with a GAAP figure and in

25

France the Autoriteacute des Marcheacutes Financiers has a similar request However there is also

evidence that firms in certain countries do not follow these rules (eg Aubert 2010 reports that

in France reconciliations are rarely provided by managers) As a robustness check we repeat the

empirical analysis excluding firms from these two countries The results are weaker but in line

with the findings reported in Table 8 We also find similar conclusions for the reconciliation

analysis when we distinguish between tabular reconciliations and written reconciliations and

when we exclude firms cross-listed in the US where reconciliations are required


Presenting a reconciliation between GAAP and non-GAAP numbers can help investors

understand the adjustments made Thus reporting a reconciliation may interfere with firms‟

choices regarding non-GAAP reporting namely adjusting for items that are recurring and giving

a high emphasis to non-GAAP figures in the press release To check for this effect we re-run the

equations of tables 6 and 7 for the subsample of observations that report a reconciliation The

results are consistent with our initial analysis suggesting that firms‟ disclosing practices are not

conditioned by the presentation of reconciliation information

6 Conclusion

For a set of international firms we analyze how compensation and good corporate

governance in the board of directors influences non-GAAP reporting decisions We analyze four

26

aspects of non-GAAP reporting that are often associated with firms‟ opportunistic intention to

portray a better image of their performance the decision to make a non-GAAP disclosure the

fact that some firms make adjustments for recurring items to GAAP earnings to calculate a non-

GAAP measure the high emphasis given to non-GAAP measures in the press release and not

disclosing a reconciliation that explains the difference between non-GAAP and GAAP earnings

We expect and find a positive relation between those discretionary aspects of non-GAAP

reporting and the fact that firms pay all or a portion of compensation in stock and option grants

aligned with firm performance Our findings suggest that performance-based compensation

encourages firms to use non-GAAP information opportunistically in order to boost users‟

perceptions about firm performance and thus maximize compensation The empirical results also

indicate that an efficient board of directors capable of monitoring firms‟ actions can help

counteract some of the discretionary disclosure choices In particular we find that an efficient

board of directors can reduce the likelihood of disclosing non-GAAP figures and reduce the

emphasis given to non-GAAP information in the press release However the exclusion of

recurring items from GAAP earnings and the decision to present reconciliation between non-

GAAP and GAAP measures do not seem to be influenced by the quality of the board It is

possible that the board does not monitor these reporting aspects Our results suggests that

internal corporate controls have only limited influence over firms‟ non-GAAP disclosure

decisions which may be of interest to regulators interested in the introduction of non-GAAP

rules in Europe

27

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Reporting Standard (FRS) 3 London ASB

Aboody D and Kasznik R (2000) CEO stock option awards and the timing of corporate

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Aggarwal R Erel I Stulz R and Williamson R (2009) Differences in governance practices

between US and foreign firms measurement causes and consequences Review of

Financial Studies 2 (8) 3131 ndash 3169

Allee K Bhattacharya N Black E and Christensen T (2007) Pro forma disclosure and

investor sophistication external validation of experimental evidence using archival data

Accounting Organizations and Society 32 (3) 201-222

Andersson P and Hellman N (2007) Does pro forma reporting bias analyst forecasts

European Accounting Review 16 (2) 277-289

Ashbaugh-Sakife H Collins D and LaFond R (2006) The effects of corporate governance on

firms credit ratings Journal of Accounting and Economics 42 203-243

Bamber L Jiang J and Wang I (2010) Whats my style The influence of top managers on

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Bebchuk L Cohen A and Ferrell A (2009) What matters in corporate governance The

Review of Financial Studies 22 (2) 783-827

Beekes W and Brown P (2006) Do better-governed Australian firms make more informative

disclosures Journal of Business Finance amp Accounting 33 (3) 422-450

28

Bhattacharya N Black E Christensen T and Larson C (2003) Assessing the relative

informativeness and permanence of pro forma earnings and GAAP operating earnings

Journal of Accounting amp Economics 36 (1-3) 285-319

Black D Black E Christensen T and Waegelein J (2011) The effects of executive

compensation contracts and auditor effort on firms pro forma reporting decisions

Working paper - Duke University

Black D and Christensen T (2009) US managers‟ use of bdquopro forma‟ adjustments to meet

strategic earnings targets Journal of Business Finance amp Accounting 36 (3) 297-326

Bowen R Davis A and Matsumoto D (2005) Do firms strategically emphasize performance

metrics in their earnings press releases The Accounting Review 80 (4) 1011-1038

Brown L and Caylor M (2006) Corporate governance and firm valuation Journal of

Accounting and Public Policy 25 409-434

Brown L D and Sivakumar K (2003) Comparing the value relevance of two operating income

measures Review of Accounting Studies 8 (4) 561-572

Choi Y Lin S Walker M and Young S (2007) Disagreement over the persistence of

earnings components evidence on the properties of management-specific adjustments

to GAAP earnings Review of Accounting Studies 12 (4) 595-622

Committee on European Securities Regulators (2005) CESR recommendation on alternative

performance measures

Durnev A and Kim E (2005) To steal or not to steal firm attributes legal environment and

valuation The Journal of Finance 60 (3) 1461-1493

Elliott W (2006) Are investors influenced by pro forma emphasis and reconciliations in

earnings announcements The Accounting Review 81 (1) 113-133

29

Eng L and Mak Y (2003) Corporate governance and voluntary disclosure Journal of


European Financial Reporting Advisory Group (2009) Pro-active accounting activities in

Europe Performance reporting an European discussion paper Brussels Belgium

EFRAG

Fama E (1980) Agency problems and theory of the firm Journal of Political Economy 88 (2)

288-307

Fich E and Shivdasani A (2006) Are busy boards effective monitors The Journal of Finance

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Frankel R McVay S and Soliman M (2011) Non-GAAP earnings and board independence

Review of Accounting Studies forthcoming

Frederickson J and J Miller (2004) The effects of pro forma earnings disclosures on analysts‟

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Gompers P Ishii J and Metrick A (2003) Corporate governance and equity prices Quarterly

Journal of Economics 118 107-155

Hitz J (2010) Press release disclosure of pro forma earnings metrics by large German

corporations - Empirical evidence and regulatory recommendations Accounting in

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Holthausen R D Larcker and RSloan (1995) Annual Bonus Schemes and the Manipulation of

Earnings Journal of Accounting and Economics 19 29-74

30

Isidro H and Marques A (2010) The role of institutional and economic forces in the strategic

use of non-GAAP disclosures to beat earnings benchmarks Working paper - IUL

ISCTE Business School

Jennings R and Marques A (2011) The impact of corporate governance on the disclosure of

manager-adjusted non-GAAP earnings Journal of Business Finance amp Accounting

forthcoming

Jensen M (1993) Presidential address the modern industrial revolution exit and the failure of

internal control systems Journal of Finance 48 831ndash880

Jensen M and K Murphy (1990) Performance Pay and Top-Management Incentives Journal of

Political Economy (98) 2 225-264

Karamanou I and Vafeas N (2005) The association between corporate boards audit

committees and management earnings forecasts an empirical analysis Journal of

Accounting Research 43(3) 453-486

Klapper L and Love I (2004) Corporate governance investor protection and performance in

emerging markets Journal of Corporate Finance 10 703-728

Leone M (2010) Whats on the SEC radar CFOcom

Lougee B and Marquardt C (2004) Earnings quality and strategic disclosure an empirical

examination of pro forma earnings The Accounting Review 79 (3) 769-795

Marques A (2006) SEC interventions and the frequency and usefulness of non-GAAP financial


31

Marques A (2010) Disclosure strategies among SampP 500 firms Evidence on the disclosure of

non-GAAP financial measures and financial statements in earnings press releases

The British Accounting Review 42 119-131

Schadewitz H and Blevins D (1998) Major determinants of interim disclosures in an

emerging market American Business Review 16 (1) 41ndash55

Zhang H and Zheng L (2011) The valuation impact of reconciling pro forma earnings to

GAAP earnings Journal of Accounting an Economics 51 186-202

32

Table 1 Non-GAAP reporting choices by industry

The table presents the frequencies of non-GAAP earnings disclosure (Panel A) frequency of recurring

adjustments (Panel B) emphasis given to non-GAAP earnings figures (Panel C) and disclosure of

reconciliation between non-GAAP and GAAP earnings (Panel D) for a sample of industrial firms

included in the Financial Times 2006 list of the 500 largest European firms and for fiscal years 2003-

2005

Panel A Non-GAAP earnings disclosure by industry

Industry Disclosure Non-disclosure

Agriculture and mining 71 14

Manufacturing 186 31

Materials and electronics 126 58

Transportation and communication 110 17

Wholesale trade 77 16

Real estate 21 9

Entertainment and business services 53 11

Other services 3 2

Total 647 158

Panel B Recurring adjustments by industry

Industry

firm-years

with

recurring

adjustments

Agriculture and mining 667

Manufacturing 630

Materials and electronics 610

Transportation and communication 667

Wholesale trade 533

Real estate 1000

Entertainment and business services 652

Other services 667

Total 630

33

Table 1 Non-GAAP reporting choices by industry (cont)

Panel C Emphasis given to non-GAAP earnings by industry Industry

Location of non-GAAP figure in the press release (N)

Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts

Agriculture and mining 690 2 48 2 13 6

Manufacturing 871 12 131 16 20 8

Materials and electronics 794 1 88 6 27 4

Transportation and communication 845 11 69 14 16 0

Wholesale trade 895 0 63 6 5 2

Real estate 952 1 18 0 2 0

Entertainment and business services 849 1 41 6 5 0

Other services 1000 0 3 0 0 0

Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()

Panel D Reconciliation between non-GAAP and GAAP earnings by industry

Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34

Table 2 Percentage of firm-years meeting board and compensation criteria

The table presents the percentage of observations that meet the criteria for board quality (Panel A) and performance-based

compensation (Panel B) for industrial firms included in the Financial Times 2006 list of the 500 largest European firms for fiscal

years 2003-2005

Panel A Board quality

firm-years

meeting criterion

All directors attended 75 of board meetings or had a valid excuse 354

Board is controlled by more than 50 independent outside directors 478

CEO is not listed as having a related-party transaction 678

No former CEO on the board 835

Compensation committee comprised solely of independent outsiders 381

Chairman and CEO are separated or there is a lead director 931

Nominating committee comprised solely of independent outsiders 958

Governance committee exists and met in the past year 144

Audit committee comprised solely of independent outsiders 86

Annually elected board (no staggered board) 138

Policy exists on outside directorships (four or fewer boards is the limit) 291

Panel B Compensation

Directors receive all or a portion of their fees in stock

and options grants are aligned with firm performance 606

35

Table 3 Summary statistics

The table presents the mean median standard deviation minimum and maximum for non-discrete variables

and frequencies for discrete variables Variables‟ definitions are as follows GAAP EPS is operating

earnings disclosed in the financial reports Non-GAAP EPS is the first non-GAAP earnings measure

reported by managers in the annual announcement‟ press release Institutional ownership is the percentage

of shares outstanding held by institutional investors Insider ownership is the percentage of shares

outstanding held by non-buy-side entities such as officers directors families public and private firms and

ESOPs Analyst following is the log of the number of analysts following the firm Intangibles is total

intangible assets to total assets Std ROA is earnings volatility measured as the standard deviation of

earnings before extraordinary items divided by total assets Size is the log of market capitalization

Leverage is debt to total assets Consensus beating is an indicator value coded one if non-GAAP earnings

meet the analyst earnings forecast when GAAP earnings do not and zero otherwise Special items is an

indicator variable coded one if the firm reports special or extraordinary items or discontinuing operations

and zero otherwise Listing US is an indicator variable coded one if the firm is cross-listed in a US market

and zero otherwise

Panel A Summary statistics of non-discrete variables

Variable Mean Median StDev Min Max

GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728

Institutional ownership 028 027 013 000 083

Insider ownership 023 012 025 000 092

Analyst following 402 403 030 314 565

Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125

Panel B Frequencies of discrete variables

Consensus beating 295

Special items 854

Listing US 360

36

Table 4 Pearson correlation matrix for variables included in the models

The table presents the person correlation coefficients of variables Variables‟ definitions are as follows Non-GAAP disclosure is an indicator variable coded one if the firm reports a non-GAAP

earnings measure in the annual announcement‟ press release and zero otherwise Recurring adjustments is an indicator variable taking the value of one if the firm excludes from GAAP

earnings recurring items such as RampD expenses depreciation expenses stock-based compensation items and tax-related and zero otherwise Non-GAAP emphasis represents the location in

the press release of the first non-GAAP earnings measure disclosed The variable is coded according to the following location (1) title (2) subtitle or highlights (3) first or second paragraph

(4) third or lower paragraph and five otherwise NoReconciliation is an indicator variable coded one if the firm does not report a reconciliation between non-GAAP and the corresponding

GAAP earnings measure in the annual announcement‟ press release and zero otherwise Compensation is an indicator variable coded as one if managers receive all or a portion of their fees in

stock and options grants are aligned with firm performance and zero otherwise Board quality is a score combining 11 board attributes defined in Aggarwal et al (2009) ndash see Table 2

Institutional ownership is the percentage of shares outstanding held by institutional investors Insider ownership is the percentage of shares outstanding held by non-buy-side entities such as

officers directors families public and private firms and ESOPs Consensus beating is an indicator value coded one if non-GAAP earnings meet the analyst earnings forecast when GAAP

earnings do not and zero otherwise Analyst following is the log of the number of analysts following the firm Intangibles is total intangible assets to total assets Special items is an indicator

variable coded one if the firm reports special or extraordinary items or discontinuing operations and zero otherwise Std ROA is earnings volatility measured as the standard deviation of

earnings before extraordinary items divided by total assets Size is the log of market capitalization Leverage is debt to total assets Listing US is an indicator variable coded one if the firm is

cross-listed in a US market and zero otherwise The symbol indicates significance 5 levels of statistical significance

Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA

Size Leverage Listing

US

Non-GAAP disclosure 1

Recurring adjustments -01812 1

Non-GAAP emphasis 02683 -00550 1

NoReconciliation 03489 -00322 00424 1

Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1

Institutional ownership -00295 -01613 00027 -00166 -00024 00659 1

Insider ownership -03006 02240 -02180 -02065 -03051 -01445 -05062 1

Consensus beating 04030 -00056 01507 02520 01105 01249 00581 -01850 1

Analyst following -01904 00748 -00633 -01669 -02307 00494 01177 01212 -02653 1

Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1

Table 5 The effect of managersrsquo compensation and board quality on the decision

to disclose non-GAAP earnings measures

The table presents estimation results from a logistic regression model where the dependent variable is Non-GAAP

disclosure Variables‟ definitions are as follows Non-GAAP disclosure is an indicator variable coded one if the firm

reports a non-GAAP earnings measure in the annual announcement‟ press release and zero otherwise

Compensation is an indicator variable coded as one if managers receive all or a portion of their fees in stock and

options grants are aligned with firm performance and zero otherwise Board quality is a score combining 11 board

attributes defined in Aggarwal et al (2009) ndash see Table 2 Institutional ownership is the percentage of shares

outstanding held by institutional investors Insider ownership is the percentage of shares outstanding held by non-

buy-side entities such as officers directors families public and private firms and ESOPs Consensus beating is an

indicator value coded one if non-GAAP earnings meet the analyst earnings forecast when GAAP earnings do not

and zero otherwise Analyst following is the log of the number of analysts following the firm Intangibles is total

intangible assets to total assets Special items is an indicator variable coded one if the firm reports special or

extraordinary items or discontinuing operations and zero otherwise Std ROA is earnings volatility measured as the

standard deviation of earnings before extraordinary items divided by total assets Size is the log of market

capitalization Leverage is debt to total assets Listing US is an indicator variable coded one if the firm is cross-listed

in a US market and zero otherwise t-statistics based on HuberWhitesandwich robust estimates of standard errors

are presented in parentheses The symbols indicate statistical significance at 1 5 and 10 levels

Variable (1) (2) (3)

Compensation 0652 0982

(183) (216)

Board quality -0519 -0933

(-188) (-233)

Institutional ownership -2959 -4752 -3461

(-191) (-341) (-200)

Insider ownership -3299 -3806 -4080

(-365) (-451) (-384)

Consensus beating 1841 2188 2197

(474) (556) (509)

Analyst following -0013 -0393 -0112

(-002) (-056) (-016)

Intangibles 1696 3555 2236

(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)

Industry dummies YES YES YES

Noobservations 283 343 243

McFadden R2 0279 0345 0372

38


to adjust for recurring items

The table presents estimation results from a regression model where the dependent variable is managersrsquo

adjustments Variables‟ definitions are as follows Recurring adjustments is an indicator variable taking the value of

one if the firm exclude from GAAP earnings recurring items such as RampD expenses depreciation expenses stock-

based compensation items and tax-related and zero otherwise Compensation is an indicator variable coded as one

if managers receive all or a portion of their fees in stock and options grants are aligned with firm performance and

zero otherwise Board quality is a score combining 11 board attributes defined in Aggarwal et al (2009) ndash see Table

2 Institutional ownership is the percentage of shares outstanding held by institutional investors Insider ownership

is the percentage of shares outstanding held by non-buy-side entities such as officers directors families public and

private firms and ESOPs Consensus beating is an indicator value coded one if non-GAAP earnings meet the

analyst earnings forecast when GAAP earnings do not and zero otherwise Analyst following is the log of the

number of analysts following the firm Intangibles is total intangible assets to total assets Special items is an

indicator variable coded one if the firm reports special or extraordinary items or discontinuing operations and zero

otherwise Std ROA is earnings volatility measured as the standard deviation of earnings before extraordinary items

divided by total assets Size is the log of market capitalization Leverage is debt to total assets Listing US is an

indicator variable coded one if the firm is cross-listed in a US market and zero otherwise t-statistics based on

HuberWhitesandwich robust estimates of standard errors are presented in parentheses The symbols

indicate statistical significance at 1 5 and 10 levels



(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)

Consensus beating -0103 -0132 -0071

(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)

Special items -0177 0097 -0116

(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39

Table 7 The effect of managersrsquo compensation and board quality on the choice of

emphasis given to non-GAAP earnings measures

The table presents estimation results from a multinomial logistic regression model where the dependent variable is

the emphasis given to the first non-GAAP earnings measure in the annual announcement‟ press release Variables‟

definitions are as follows Emphasis is coded according to the following location (1) title (2) subtitle or highlights

(3) first or second paragraph (4) third or lower paragraph and five otherwise Compensation is an indicator variable

coded as one if managers receive all or a portion of their fees in stock and options grants are aligned with firm

performance and zero otherwise Board quality is a score combining 11 board attributes defined in Aggarwal et al

(2009) ndash see Table 2 t-statistics based on HuberWhitesandwich robust estimates of standard errors are presented

in parentheses The symbols indicate statistical significance at 1 5 and 10 levels


Panel A Disclosure in the title


(412) (269)


(-191) (-171)

Panel B Disclosure in the subtitle or highlights

Compensation -0848 -0589

(-090) (-054)


(-219) (-137)

Panel C Disclosure in the first or second paragraph


(-073) (-044)


(-220) (-179)

Panel D Disclosure in the third paragraph or below


(-082) (-015)


(-207) (-193)


Other firm variables YES YES YES


McFadden R2 0286 0256 0305

40


to disclose reconciliation between non-GAAP and GAAP earnings

The table presents estimation results from a logistic regression model where the dependent variable is

NoReconciliation Variables‟ definitions are as follows NoReconciliation is an indicator variable coded one if the

firm does not report a reconciliation between non-GAAP and the corresponding GAAP earnings measure in the

annual announcement‟ press release and zero otherwise Compensation is an indicator variable coded as one if

managers receive all or a portion of their fees in stock and options grants are aligned with firm performance and















(240) (242)

Board quality 0002 -0085

(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)

Analyst following 0396 -0435 0147

(067) (-077) (022)


(011) (113) (017)

Special items 0468 0054 0642

(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

1

The effects of compensation and board quality


Abstract

This study reports international evidence on the impact of compensation and board

quality on the voluntary disclosure of non-GAAP earnings numbers We find that compensation

contracts linked to firm performance are associated with a higher probability of disclosure of

non-GAAP figures in the earnings announcement‟s press release Furthermore when this type of

compensation is used firms tend to report non-GAAP figures in the title of the press release

make more adjustments for recurring items and avoid reporting reconciliations We also show

that an efficient governance structure of the board of directors can help restrain these

discretionary disclosure decisions regarding non-GAAP reporting

Key words non-GAAP financial measures pro forma earnings compensation

corporate governance

2

1 Introduction










performance












3

























4

























5


















decision






6























7























8






















9



as indicated below



performance














10






















11










board














12

















3 Data and sample

13


























14


























15



reconciliation
















16


























17

























sample

18



















This result is







19















(854)







20













reporting decisions









21







effect















22





















11



23


















al 2007)






24






















25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

2

1 Introduction










performance












3

























4

























5


















decision






6























7























8






















9



as indicated below



performance














10






















11










board














12

















3 Data and sample

13


























14


























15



reconciliation
















16


























17

























sample

18



















This result is







19















(854)







20













reporting decisions









21







effect















22





















11



23


















al 2007)






24






















25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

3

























4

























5


















decision






6























7























8






















9



as indicated below



performance














10






















11










board














12

















3 Data and sample

13


























14


























15



reconciliation
















16


























17

























sample

18



















This result is







19















(854)







20













reporting decisions









21







effect















22





















11



23


















al 2007)






24






















25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

4

























5


















decision






6























7























8






















9



as indicated below



performance














10






















11










board














12

















3 Data and sample

13


























14


























15



reconciliation
















16


























17

























sample

18



















This result is







19















(854)







20













reporting decisions









21







effect















22





















11



23


















al 2007)






24






















25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

5


















decision






6























7























8






















9



as indicated below



performance














10






















11










board














12

















3 Data and sample

13


























14


























15



reconciliation
















16


























17

























sample

18



















This result is







19















(854)







20













reporting decisions









21







effect















22





















11



23


















al 2007)






24






















25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

6























7























8






















9



as indicated below



performance














10






















11










board














12

















3 Data and sample

13


























14


























15



reconciliation
















16


























17

























sample

18



















This result is







19















(854)







20













reporting decisions









21







effect















22





















11



23


















al 2007)






24






















25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

7























8






















9



as indicated below



performance














10






















11










board














12

















3 Data and sample

13


























14


























15



reconciliation
















16


























17

























sample

18



















This result is







19















(854)







20













reporting decisions









21







effect















22





















11



23


















al 2007)






24






















25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

8






















9



as indicated below



performance














10






















11










board














12

















3 Data and sample

13


























14


























15



reconciliation
















16


























17

























sample

18



















This result is







19















(854)







20













reporting decisions









21







effect















22





















11



23


















al 2007)






24






















25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

9



as indicated below



performance














10






















11










board














12

















3 Data and sample

13


























14


























15



reconciliation
















16


























17

























sample

18



















This result is







19















(854)







20













reporting decisions









21







effect















22





















11



23


















al 2007)






24






















25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

10






















11










board














12

















3 Data and sample

13


























14


























15



reconciliation
















16


























17

























sample

18



















This result is







19















(854)







20













reporting decisions









21







effect















22





















11



23


















al 2007)






24






















25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

11










board














12

















3 Data and sample

13


























14


























15



reconciliation
















16


























17

























sample

18



















This result is







19















(854)







20













reporting decisions









21







effect















22





















11



23


















al 2007)






24






















25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

12

















3 Data and sample

13


























14


























15



reconciliation
















16


























17

























sample

18



















This result is







19















(854)







20













reporting decisions









21







effect















22





















11



23


















al 2007)






24






















25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

13


























14


























15



reconciliation
















16


























17

























sample

18



















This result is







19















(854)







20













reporting decisions









21







effect















22





















11



23


















al 2007)






24






















25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

14


























15



reconciliation
















16


























17

























sample

18



















This result is







19















(854)







20













reporting decisions









21







effect















22





















11



23


















al 2007)






24






















25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

15



reconciliation
















16


























17

























sample

18



















This result is







19















(854)







20













reporting decisions









21







effect















22





















11



23


















al 2007)






24






















25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

16


























17

























sample

18



















This result is







19















(854)







20













reporting decisions









21







effect















22





















11



23


















al 2007)






24






















25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

17

























sample

18



















This result is







19















(854)







20













reporting decisions









21







effect















22





















11



23


















al 2007)






24






















25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

18



















This result is







19















(854)







20













reporting decisions









21







effect















22





















11



23


















al 2007)






24






















25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

19















(854)







20













reporting decisions









21







effect















22





















11



23


















al 2007)






24






















25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

20













reporting decisions









21







effect















22





















11



23


















al 2007)






24






















25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

21







effect















22





















11



23


















al 2007)






24






















25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

22





















11



23


















al 2007)






24






















25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

23


















al 2007)






24






















25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

24






















25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

25
















6 Conclusion



26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

26




















rules in Europe

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

27

References





















28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

28
























29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

29





EFRAG


288-307


61 (2) 689-724





79 (3) 667-686





Europe 7 (1) 63-86



30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

30






forthcoming















31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

31








32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

32






2005








Real estate 21 9


Other services 3 2

Total 647 158


Industry

firm-years

with

recurring

adjustments


Manufacturing 630



Wholesale trade 533

Real estate 1000


Other services 667

Total 630

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

33




Title Subtitle or

highlights

First or

second

paragraph

Third

paragraph

or below

Other parts






Real estate 952 1 18 0 2 0



Total 835 28 461 50 88 20

Non-GAAP

earnings has

higher emphasis

()


Industry

firm-years

presenting a

reconcilition


Manufacturing 602



Wholesale trade 766

Real estate 619


Other services 1000

Total 663

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

34




years 2003-2005


firm-years

meeting criterion















35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

35















and zero otherwise



GAAP EPS 271 106 495 -085 4302

Non-GAAP EPS 367 153 680 -033 4728




Intangibles 022 018 017 000 080

Std ROA 004 002 006 000 054

Size 884 868 099 592 1190

Leverage 028 026 016 000 125



Special items 854

Listing US 360

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

36















Non-GAAP

disclosure

Recurring

adjustments

Non-

GAAP

emphasis

No

Reconciliation

Compensation Board

quality

Institutional

ownership

Insider

ownership

Consensus

beating

Analyst

following

Intangibles Special

items

St

ROA


US





Compensation 02304 -00543 00782 01668 1

Board quality 00399 -00330 -00049 00663 01949 1





Intangibles 02125 -00211 01320 01557 00181 00438 -00231 00417 01614 -00999 1

Special items -01113 01172 -00835 -00238 00279 00171 00113 00786 00542 01551 01206 1

St ROA -00707 00214 -00204 00698 -01608 00552 02062 -01032 -00390 00093 00793 -00140 1

Size 00883 00359 -00124 00330 01385 01956 -00169 -00129 -00587 03032 00801 01493 -00165 1

Leverage 00257 00126 00130 00801 01190 -00354 00356 00079 00671 -01887 03093 00174 00817 -00996 1

Listing US 00649 -02215 -00359 -00160 00984 00557 00266 -01002 00997 01221 -00802 -00437 -00859 01997 -01384 1





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190





















(183) (216)


(-188) (-233)


(-191) (-341) (-200)


(-365) (-451) (-384)


(474) (556) (509)


(-002) (-056) (-016)


(150) (336) (167)

Special items -0387 -0744 -0564

(-095) (-193) (-124)

Std ROA -1020 -2586 -3902

(-041) (-119) (-137)

Size 0010 0449 0153

(005) (244) (071)

Leverage -0034 -0108 -0607

(-003) (-011) (-043)

Listing US 0784 0509 0646

(225) (154) (152)

Intercept 1571 1172 2154

(059) (041) (072)



McFadden R2 0279 0345 0372

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

38






















(224) (205)


(-037) (-006)


(-211) (-278) (-189)


(-214) (-116) (-190)


(-031) (-051) (-022)


(-160) (-140) (-132)

Intangibles -0182 0228 -0372

(-016) (028) (-034)


(-037) (027) (-025)

Std ROA 0897 -0320 0569

(052) (-024) (037)

Size 0028 -0054 0047

(015) (-034) (026)

Leverage 1088 0821 1160

(089) (085) (095)

Listing US 0238 -0124 0101

(067) (-043) (029)

Intercept 1727 1809 0987

(070) (091) (042)



McFadden R2 0147 0101 0122

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

39














(412) (269)


(-191) (-171)



(-090) (-054)


(-219) (-137)



(-073) (-044)


(-220) (-179)



(-082) (-015)


(-207) (-193)




McFadden R2 0286 0256 0305

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

40






















(240) (242)


(001) (-031)


(-210) (-261) (-133)


(-370) (-420) (-325)


(374) (342) (309)


(067) (-077) (022)


(011) (113) (017)


(108) (014) (138)

Std ROA 11964 3247 9613

(199) (112) (184)

Size -0200 0124 -0110

(-112) (084) (-053)

Leverage -0901 0350 -1472

(-075) (045) (-116)

Listing US -0398 0010 -0423

(-119) (004) (-111)

Intercept 1031 3041 1511

(040) (130) (054)



McFadden R2 0188 0155 0190

Documents

The effect of compensation and board quality on non-GAAP