Abstract

http://ssrn.com/abstract=1194822
 
 

References (65)



 
 

Citations (9)



 


 



Investor Sentiment and Pro Forma Earnings Disclosures


Nerissa C. Brown


University of Delaware - Alfred Lerner College of Business and Economics

Theodore E. Christensen


Brigham Young University - Marriott School of Management

W. Brooke Elliott


University of Illinois at Urbana-Champaign

Richard Mergenthaler Jr.


University of Iowa - Henry B. Tippie College of Business

August 1, 2011

Journal of Accounting Research, Vol. 50, No. 1, pp. 1-50, March 2012

Abstract:     
This study examines the influence of investor sentiment on managers’ discretionary disclosure of “pro forma” (adjusted) earnings metrics in earnings press releases. We find that managers’ propensity to disclose an adjusted earnings metric increases with the level of investor sentiment and, in particular, the propensity to disclose an adjusted number that exceeds the GAAP earnings figure. Further, our analyses suggest that as investor sentiment increases, managers (1) exclude higher levels of both recurring and nonrecurring expenses in calculating the pro forma earnings number and (2) emphasize the pro forma figure by placing it more prominently within the earnings press release. Additional analyses indicate that the association between investor sentiment and managers’ pro forma disclosure decisions at least partly reflects opportunistic motives. Finally, we find that managers’ own sentiment-driven expectations also play a role in their pro forma disclosure decisions.

Number of Pages in PDF File: 45

Keywords: investor sentiment, pro forma earnings, corporate disclosure

JEL Classification: G14, G18, M41, M45

Accepted Paper Series





Download This Paper

Date posted: August 3, 2008 ; Last revised: February 20, 2012

Suggested Citation

Brown, Nerissa C. and Christensen, Theodore E. and Elliott, W. Brooke and Mergenthaler, Richard, Investor Sentiment and Pro Forma Earnings Disclosures (August 1, 2011). Journal of Accounting Research, Vol. 50, No. 1, pp. 1-50, March 2012. Available at SSRN: http://ssrn.com/abstract=1194822

Contact Information

Nerissa C. Brown (Contact Author)
University of Delaware - Alfred Lerner College of Business and Economics ( email )
Newark, DE 19716
United States
Theodore E. Christensen
Brigham Young University - Marriott School of Management ( email )
Provo, UT 84602
United States
801-422-1768 (Phone)
801-422-0621 (Fax)
W. Brooke Elliott
University of Illinois at Urbana-Champaign ( email )
1206 South Sixth Street
Champaign, IL 61820
United States
Richard Dean Mergenthaler Jr.
University of Iowa - Henry B. Tippie College of Business ( email )
108 Pappajohn Business Building
Iowa City, IA 52242-1000
United States
319-335-0848 (Phone)
Feedback to SSRN


Paper statistics
Abstract Views: 2,677
Downloads: 755
Download Rank: 17,430
References:  65
Citations:  9

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo5 in 0.344 seconds