Supplier dependence upon major customers and non-GAAP reporting

We investigate whether and how customer–supplier relationship influences manager-disclosed non-GAAP earnings. We find that supplier managers are more likely to voluntarily disclose non-GAAP earnings in press releases when supplier firms are more heavily dependent on major customers for sales. The positive relationship becomes stronger in the presence of higher levels of relationship-specific investments, lower customer switching costs, increased costs for customers to acquire private information, and reduced proprietary costs of public disclosures. Overall, our findings suggest that non-GAAP earnings disclosure could be a channel through which to fulfill the transparency commitments by suppliers within supply chains.