Are Investors Misled by “ Pro Forma ” Earnings ?

@inproceedings{Johnson2002AreIM,
  title={Are Investors Misled by “ Pro Forma ” Earnings ?},
  author={William B. Johnson},
  year={2002}
}
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

References

Publications referenced by this paper.
Showing 1-10 of 20 references

Analysts increasingly favor using cash flow over reported earnings in stock valuations.

E. MacDonald
Wall Street Journal (April • 1999
View 9 Excerpts
Highly Influenced

Capital markets research in accounting.

S P.
Journal of Business (July • 1987
View 6 Excerpts
Highly Influenced

Assessing the relative informativeness and permanence of pro forma earnings and GAAP operating earnings.

N Bhattacharya, E. Black, T. Christensen, C. Larson
Working paper, • 2002

Earnings preannouncement strategies.

L. Soffer, B. Walther, R. Thiagarajan
Journal of Accounting Research (May 2002), • 2002

The predictive value of expenses excluded from ‘pro forma

J. Doyle, R. Lundholm, M. Soliman
earnings.” Working paper, • 2002

Changes in the value-relevance of earnings and book values over

E. Maydew, I. Weiss
Business Week (November • 2001

Comparing the quality of three earnings numbers.

L. Brown, K. Sivakumar
Journal of Accounting Research (March • 2001
View 2 Excerpts

Earnings surprises when firms choose what matters.

M. Bagnoli, R. Eskew, S. G. Watts
Working paper, Purdue University • 2001
View 1 Excerpt

Similar Papers

Loading similar papers…