The Reporting of Alternative Performance Measures in Germany and the Introduction of the ESMA Guidelines

Abstract We provide descriptive evidence of the development of the disclosure of Alternative Performance Measures (APMs) in Germany over time, as well as insights into their attributes after introduction of the ESMA Guidelines. Using a hand-collected dataset of APMs, we generally find an increase in the fraction of firms that disclose at least one APM, and larger firms are more likely to engage in APM disclosure. Additionally, we find that adjusted earnings are substantially higher than the corresponding GAAP earnings, so the sum of exclusions is, on average, profit-increasing rather than profit-decreasing. Furthermore, the introduction of the ESMA Guidelines is not associated with a decrease in the likelihood of APM reporting; rather, it reduces the speed of the increase in the likelihood of APM reporting and the magnitude of exclusions. This study offers timely insights into the development of APM reporting in Germany.