Are Investors Misled by “ Pro Forma ” Earnings ?

  title={Are Investors Misled by “ Pro Forma ” Earnings ?},
  author={William B. Johnson},
This paper documents the frequency and magnitude of “pro forma” earnings in press releases issued during June through August 2000 and describes the 433 firms that engaged in this financial disclosure strategy. We then use a market multiples approach to determine if investors assign a higher (or lower) share price to pro forma firms than other firms. We find no evidence that pro forma firms are priced differently than other firms. We also find no evidence of a stock return premium (or penalty… CONTINUE READING


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