Special Items: A Descriptive Analysis

Posted: 8 Feb 2011 Last revised: 2 Nov 2011

See all articles by Peter M. Johnson

Peter M. Johnson

Brigham Young University - School of Accountancy

Thomas J. Lopez

University of Alabama - Culverhouse School of Accountancy

Juan Manuel Sanchez

University of Texas at San Antonio

Date Written: February 7, 2011

Abstract

We provide a comprehensive analysis of special items and the characteristics of the firms that recognize them. Our analysis reveals that the temporal frequency, magnitude, and persistence of special items has increased significantly in the last 30 years, and that such increases are primarily driven by negative special items. More recently, however, our evidence is consistent with both a decline in frequency and magnitude of negative special items. On the other hand, we find that the frequency of reporting of positive special items, which remained relatively constant through 2002, has increased in more recent years. We also find strong evidence that subsequent special item reporting is an increasing function of the frequency of “prior” special item reporting. Using a random subsample of firms reporting special items, we document that 22 percent of the amounts reported in Compustat do not reconcile with the amounts reported on the firms’ actual financial statements. Our comprehensive analysis should be of interest to regulators, academic and managers interested in the implications of special items on firm-related consequences such as future earnings and firm value. Our examination can also serve as a catalyst for researchers interested in extending this important area of inquiry.

Suggested Citation

Johnson, Peter M. and Lopez, Thomas J. and Sanchez, Juan Manuel, Special Items: A Descriptive Analysis (February 7, 2011). Accounting Horizons, Vol. 25, No. 3, pp. 511--536, 2011. Available at SSRN: https://ssrn.com/abstract=1756936

Peter M. Johnson

Brigham Young University - School of Accountancy ( email )

Provo, UT 84602
United States

Thomas J. Lopez

University of Alabama - Culverhouse School of Accountancy ( email )

Culverhouse College of Business
Tuscaloosa, AL 35487-0223
United States
205-348-2907 (Phone)

Juan Manuel Sanchez (Contact Author)

University of Texas at San Antonio ( email )

One UTSA Circle
San Antonio, TX 78249
United States

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