Abstract

http://ssrn.com/abstract=923898
 
 

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Signaling Firm Performance Through Financial Statement Presentation: An Analysis Using Special Items


Edward J. Riedl


Boston University - School of Management

Suraj Srinivasan


Harvard Business School

July 28, 2009

Contemporary Accounting Research, Forthcoming

Abstract:     
This paper investigates whether managers’ presentation of special items within the financial statements reflects economic performance or opportunism. Specifically, we assess special items presented as a separate line item on the income statement (income statement presentation) to those aggregated within another line item with disclosure only in the footnotes (footnote presentation). Our study is motivated by standard-setting interest in performance reporting and financial statement presentation, as well as prior research investigating managers’ presentation choices in other contexts. Empirical results reveal that special items receiving income statement presentation are less persistent relative to those receiving footnote presentation. These results are consistent across numerous alternative specifications. Overall, the findings are consistent with managers using the income statement versus footnote presentation to assist users in identifying those special items most likely to differ from other components of earnings―that is, for informational, as opposed to opportunistic, motivations.

Number of Pages in PDF File: 53

Keywords: special items, strategic reporting, presentation, voluntary disclosure, pro forma

JEL Classification: M41, M43, M44, M45

working papers series


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Date posted: August 13, 2006 ; Last revised: July 28, 2009

Suggested Citation

Riedl, Edward J. and Srinivasan, Suraj, Signaling Firm Performance Through Financial Statement Presentation: An Analysis Using Special Items (July 28, 2009). Contemporary Accounting Research, Forthcoming. Available at SSRN: http://ssrn.com/abstract=923898 or http://dx.doi.org/10.2139/ssrn.923898

Contact Information

Edward J. Riedl (Contact Author)
Boston University - School of Management ( email )
595 Commonwealth Avenue
Boston, MA MA 02215
United States
617-353-2317 (Phone)
Suraj Srinivasan
Harvard Business School ( email )
Soldiers Field
Boston, MA 02163
United States
HOME PAGE: http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=pub&facId=10700
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