We investigate how managers report one-time gains resulting from legal settlements and insurance recoveries in press releases following Regulation G. Regulation G may have had the unintended consequence of allowing managers to omit mention of these transitory gains, resulting in higher reported performance absent non-GAAP disclosure. We find that while managers generally provide some information about transitory gains in the earnings announcement, there is a large amount of variation in the granularity of the detail. For example, the vast majority of managers (88.5 percent) mention the gain in the earnings announcement, but few (34 percent) report non-GAAP earnings per share summary figures explicitly excluding transitory gains. This percentage is significantly lower than pre-Regulation G, where approximately 62 percent of firms reported non-GAAP earnings per share excluding the transitory gain. Interestingly, we find that gains are less likely to be carved out of earnings when there are no concurrent transitory losses, providing some evidence that there continues to be an opportunistic component of non-GAAP reporting following Regulation G.

Data Availability: Data are available from sources identified in the text.

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