We analyze the relation between corporate financing activities and sell-side analysts' investment research. We document pervasive evidence of overoptimism in sell-side analysts' earnings forecasts, stock recommendations and target prices that is systematically related to corporate financing...

Security analysts, investors and the press are increasingly relying on modified definitions of GAAP net income, known by such names as 'operating EPS' and 'pro forma EPS.' These new 'Street' definitions of EPS exclude items such as 'non-recurring' and 'non-cash' charges. Moreover, this move to...

Existing research indicates that firms with high accruals are more likely to experience future earnings reversals and SEC enforcement actions for GAAP violations, but that investors do not appear to anticipate these consequences. In this paper, we directly examine the published opinions of two...

We develop a comprehensive and parsimonious measure of corporate financing activities and document a negative relation between this measure and both future stock returns and future profitability. The economic and statistical significance of the results using our comprehensive measure of external...

Managers, security analysts, investors, and the press rely increasingly on modified definitions of GAAP net income, known by such names as 'operating' and 'pro forma' earnings. We document this phenomenon and discuss competing explanations for the recent rise in the use of such modified earnings...

Existing research indicates that firms with high accruals are more likely to experience future earnings problems, but that investors' expectations, as reflected in stock prices, do not appear to anticipate these problems. In this paper, we directly examine the published opinions of two types of...