A Discussion of 'Assessing the Relative Informativeness and Permanence of Pro Forma Earnings and Gaap Operating Earnings'

Posted: 28 Nov 2003 Last revised: 15 Jul 2010

Date Written: July 15, 2010

Abstract

By analyzing a carefully constructed earnings announcements sample that discloses a 'pro forma' earnings number, Bhattacharya, Black, Christensen, and Larson (2002) contribute to recent research documenting increasing differences between GAAP earnings and alternative earnings definitions followed by capital markets. The paper provides interesting descriptive data on pro forma earnings per share relative to both GAAP earnings per share and actual earnings per share as tracked by I/B/E/S. Also, the authors conduct tests of the relative informativeness and persistence of these three earnings measures. Econometric and data limitations inhibit the inferences that can be drawn from some of these tests.

Keywords: pro forma earnings, information content of earnings, persistence of earnings, analysts' forecasts

JEL Classification: G12, G14, G29, M41, M43

Suggested Citation

Bradshaw, Mark T, A Discussion of 'Assessing the Relative Informativeness and Permanence of Pro Forma Earnings and Gaap Operating Earnings' (July 15, 2010). Journal of Accounting & Economics (JAE), Vol. 36, Nos. 1-3, pp. 321-336, December 2003. Available at SSRN: https://ssrn.com/abstract=473182

Mark T Bradshaw (Contact Author)

Boston College ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

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