We contribute to the debate regarding the informativeness of pro forma earnings disclosures by providing evidence that a group of informed traders, short sellers, trade as if firms' voluntary non-GAAP earnings disclosures create information advantages they can exploit. While prior research...

We investigate how interactions between analysts and managers influence (1) analyst disagreement about the definition of forecasted street earnings and (2) shifts in the definition of actual street earnings. Textual analysis of conference call transcripts indicates that more discussion about...

Managers have a variety of tools at their disposal to influence stakeholder perceptions. Earnings management and the strategic reporting of non‐GAAP earnings are just two of the available menu choices. We explore how real earnings management and accruals management influence the probability...

Despite the apparent importance of ‘‘street earnings'' to investors, we know relatively little about the process through which this earnings metric is determined. The limited evidence in the extant literature provides analyst-centric explanations, suggesting that analysts' abilities and...

Researchers frequently proxy for managers' non‐GAAP disclosures using performance metrics available through analyst forecast data providers (FDPs), such as I/B/E/S. The extent to which FDP‐provided earnings are a valid proxy for managers' non‐GAAP reporting, however, has been debated...

We examine analysts' GAAP earnings forecasts and illustrate their usefulness in two prominent research settings. First, we find that the availability of GAAP forecasts has increased dramatically since 2003, and they are now available for most I/B/E/S-covered firms. Next, we utilize GAAP...

We investigate whether firms change their non-GAAP reporting practices after debt covenant violations. We find that the likelihood that a firm will disclose non-GAAP earnings decreases and (for those that continue to disclose) the quality of non-GAAP reporting improves following covenant...

We investigate two potential deterrents of aggressive pro forma reporting. First, the design of compensation contracts can encourage managers to adopt either a short- or a long-term focus. While it is difficult to observe whether compensation contracts are tied directly to pro forma earnings...

The Financial Accounting Standards Committee of the American Accounting Association (the Committee) is charged with responding to requests for comments from standard-setters on issues related to financial reporting. The Financial Accounting Foundation (FAF) recently released for public comment,...

We use a novel data set to examine the across-time consistency and across-firm comparability of firms’ non-GAAP earnings disclosures. Given widespread concern about non-GAAP reporting among regulators, standard setters, the investor community, and academics, our investigation provides timely...