Pro forma disclosure and investor sophistication: External validation of experimental evidence using archival data

Accounting, Organizations and Society

Volumn 32, Issue 3, 2007, Pages 201-222

  Allee, Kristian D ^a   Bhattacharya, Nilabhra ^b   Black, Ervin L ^c   Christensen, Theodore E ^c  

^a INDIANA UNIVERSITY   (United States)

^b SOUTHERN METHODIST UNIVERSITY   (United States)

^c BRIGHAM YOUNG UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 33845907656     PISSN: 03613682     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.aos.2006.09.012     Document Type: Article

References (50)

1. Abdel-Khalik, A. R., & Ajinkya, B. B. (1979). Empirical research in accounting: A methodological viewpoint. Accounting Education Series No. 4. Sarasota, FL: American Accounting Association.
2. AICPA (American Institute of Certified Public Accountants), (October, 1973). Objectives of Financial Statements. New York: AICPA.
3. Barber B.M., and Odean T. The courage of misguided convictions: The trading behavior of individual investors. Financial Analyst Journal November-December (1999) 41-55
4. Barber B.M., and Odean T. Trading is hazardous to your wealth: The common stock investment performance of individual investors. The Journal of Finance April (2000) 773-806
5. Barclay M.J., and Warner J.B. Stealth trading and volatility: Which trades move prices?. Journal of Financial Economics December (1993) 281-305
6. Belsey D.A., Kuh E., and Welsch R.E. Regression diagnostics (1980), John Wiley & Sons, New York
7. Bhattacharya N. Investors' trade size and trading responses around earnings announcements: An empirical investigation. The Accounting Review April (2001) 221-244
8. Bhattacharya N., Black E.L., Christensen T.E., and Larson C.R. Assessing the relative informativeness and permanence of pro forma earnings and GAAP operating earnings. Journal of Accounting and Economics 36 (2003) 285-319
9. Bhattacharya, N., Black, E. L., Christensen, T. E., & Mergenthaler, R. (forthcoming). Who trades on pro forma earnings information? The Accounting Review.
10. Bloomfield R., Libby R., and Nelson M.W. Confidence and the welfare of less-informed investors. Accounting, Organizations and Society November (1999) 623-647
11. Bouchard Jr. T.J. Unobtrusive measure: An inventory of uses. Sociological Methods and Research (1976) 267-300
12. Bowen R.M., Davis A.K., and Matsumoto D.A. Emphasis on pro forma versus GAAP earnings in quarterly press releases: Determinants, SEC intervention, and market reactions. The Accounting Review October (2005) 1011-1039
13. Burns J. Lawmakers take closer look at pro forma results. Dow Jones Newswire July 31 (2001)
14. Bushee B.J., Matsumoto D.A., and Miller G.S. Open versus closed conference calls: The determinants and effects of broadening access to disclosure. Journal of Accounting and Economics January (2003) 149-180
15. Chakravarty S. Stealth-trading: Which traders' trades move stock price?. Journal of Financial Economics August (2001) 289-307
16. Cook T.D., and Campbell D.T. The design and conduct of quasi-experiments and true experiments in field settings. Handbook of industrial and organizational psychology (1976), Rand McNally, Chicago, IL (pp. 223-336)
17. Cready W.M. Information value and investor wealth: The case of earnings announcements. Journal of Accounting Research 26 (1988) 1-27
18. Cready W.M., and Mynatt P.G. The information content of annual reports: A price and trading response analysis. The Accounting Review April (1991) 291-312
19. Derby M.S. Investors getting more data, but is it the right data?. Dow Jones Newswires September 3 (2001)
20. Dreman D. Fantasy earnings. Forbes October 1 (2001)
21. Elder R.J., and Allen R.D. An empirical investigation of the auditor's decision to project errors. Auditing: A Journal of Practice & Theory 17 2 (1998) 71-87
22. Elliott W.B. Are investors influenced by pro forma emphasis and reconciliations in earnings announcements?. The Accounting Review 81 1 (2006) 113-133
23. Ellis K., Michaely R., and O'Hara M. The making of a dealer market: From entry to equilibrium in the trading of Nasdaq stocks. Journal of Finance 57 (2000) 2289-2316
24. Elstein A. Waste management excludes some expenses in accounting. The Wall Street Journal August 23 (2001)
25. Financial Accounting Standards Board (FASB). 2002. Financial performance reporting by business enterprises. Available from http://accounting.rutgers.edu/raw/fasb/project/fin_reporting.html. Description and background (Updated February 20, 2002).
26. In: Foster G. (Ed). Financial statement analysis. second ed. (1986), Prentice-Hall, Englewood Cliffs, NJ
27. Frederickson J.R., and Miller J.S. The effects of pro forma earnings disclosures on analysts' and nonprofessional investors' equity valuation judgments. The Accounting Review 79 3 (2004) 667-686
28. Hand J.R., and Beatty R.P. The causes and effects of mandated accounting standards: SFAS No. 94 as a test of the level playing field theory. Journal of Accounting, Auditing and Finance 7 Fall (1992) 509-530
29. Jick T.D. Mixing qualitative and quantitative methods: Triangulation in action. Administrative Science Quarterly (1979) 602-611
30. Kerlinger F.N. Foundations of behavioral research. third ed. (1986), Holt, Rinehart and Winston Inc., New York, NY
31. Krische S.D. Investors' evaluations of strategic prior-period benchmark disclosures in earnings announcements. The Accounting Review January (2005) 243-268
32. Kyle A.S. Continuous auction and insider trading. Econometrica November (1985) 1315-1335
33. Lee C.M.C. Earnings news and small traders: An intraday analysis. Journal of Accounting and Economics 15 (1992) 265-302
34. Lee C.M.C., and Radhakrishna B. Inferring investor behavior: Evidence from TORQ data. Journal of Financial Markets 3 (2000) 83-111
35. Lee C.M.C., and Ready M.J. Inferring trade direction from intraday data. The Journal of Finance 46 (1991) 733-746
36. Levinsohn A. Popularity of pro forma earnings prompts reform. Strategic Finance February (2002) 63-64
37. Libby R., Bloomfield R., and Nelson M.W. Experimental research in financial accounting. Accounting, Organizations and Society 27 8 (2002) 775-810
38. Liesman S., and Weil J. Standard & Poor's fires new salvo in debate over pro forma earnings. The Wall Street Journal November 7 (2001)
39. Lougee B.A., and Marquardt C.A. Earnings informativeness and strategic disclosure: An empirical examination of 'pro forma' earnings. The Accounting Review 79 3 (2004) 769-795
40. Maines L.A., and McDaniel L.S. Effects of comprehensive-income characteristics on nonprofessional investors' judgments: The role of financial-statement presentation format. The Accounting Review 75 2 (2000) 179-207
41. Meulbroek L.A. An empirical analysis of illegal insider trading. The Journal of Finance December (1992) 1661-1699
42. McGrath J.E. Dilemmatics: The study of research choices and dilemmas. In: McGrath J.E., Martin J., and Kulka R.A. (Eds). Judgment calls in research (1982), Sage, Newbury Park, CA 69-102
43. Sackett P.R., and Larson Jr. J.R. Research strategies and tactics in industrial and organizational psychology. In: Dunnette M.D., and Hough L.M. (Eds). Handbook of industrial and organizational psychology (1990), Consulting Psychologists Press, Palo Alto, CA 419-489
44. Scandura T.A., and Williams E.A. Research methodology in management: Current practices, trends, and implications for future research. Academy of Management Journal 43 (2000) 1248-1264
45. Schrand C.M., and Walther B.R. Strategic benchmarks in earnings announcements: The selective disclosure of prior-period earnings components. The Accounting Review 75 (2000) 151-177
46. Smith H.W. Strategies of social research: The methodological imagination (1975), Prentice-Hall, Englewood Cliffs, N.
47. The Securities and Exchange Commission. 2001. Pro forma financial information: Tips for investors. Available from http://www.sec.gov/investor/pubs/proforma12-4.htm, December 4, 2001.
48. Wallace W. Pro forma before and after the SEC's warning: A quantification of reporting variances from GAAP (2002), FEI Research Foundation, Morristown, NJ
49. Waller W.S., and Zimbelman M.F. A cognitive footprint in archival data: Generalizing the dilution effect from laboratory to field settings. Organizational Behavior and Human Decision Processes 91 (2003) 254-268
50. Weil J. Companies pollute earnings reports, leaving P/E ratios hard to calculate. The Wall Street Journal August 21 (2001) A1