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Article: The valuation impact of reconciling pro forma earnings to GAAP earnings
Title | The valuation impact of reconciling pro forma earnings to GAAP earnings |
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Authors | |
Keywords | Pro Forma Earnings Valuation Regulation G |
Issue Date | 2011 |
Publisher | Elsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jae |
Citation | Journal of Accounting and Economics, 2011, v. 51 n. 1-2, p. 186-202 How to Cite? |
Abstract | Regulation G requires all companies to quantitatively reconcile pro forma earnings with GAAP earnings. This paper provides three findings related to the impact of reconciliations on mispricing of pro forma earnings. First, prior to Reg G, we find that mispricing of pro forma earnings is limited to firms with low reconciliation quality. There is no evidence of mispricing for firms with high reconciliation quality. Second, we find no evidence of mispricing after Reg G. Third, there is a cross-Reg G reduction of mispricing for firms whose reconciliation quality improves, and there continues to be no mispricing for firms that have high reconciliation quality both before and after Reg G. Together, our results support the notion that better reconciliations reduce the extent of mispricing. |
Persistent Identifier | http://hdl.handle.net/10722/202262 |
ISSN | 2021 Impact Factor: 7.293 2020 SCImago Journal Rankings: 6.607 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Zhang, H | - |
dc.contributor.author | Zheng, L | - |
dc.date.accessioned | 2014-09-01T03:33:21Z | - |
dc.date.available | 2014-09-01T03:33:21Z | - |
dc.date.issued | 2011 | - |
dc.identifier.citation | Journal of Accounting and Economics, 2011, v. 51 n. 1-2, p. 186-202 | - |
dc.identifier.issn | 0165-4101 | - |
dc.identifier.uri | http://hdl.handle.net/10722/202262 | - |
dc.description.abstract | Regulation G requires all companies to quantitatively reconcile pro forma earnings with GAAP earnings. This paper provides three findings related to the impact of reconciliations on mispricing of pro forma earnings. First, prior to Reg G, we find that mispricing of pro forma earnings is limited to firms with low reconciliation quality. There is no evidence of mispricing for firms with high reconciliation quality. Second, we find no evidence of mispricing after Reg G. Third, there is a cross-Reg G reduction of mispricing for firms whose reconciliation quality improves, and there continues to be no mispricing for firms that have high reconciliation quality both before and after Reg G. Together, our results support the notion that better reconciliations reduce the extent of mispricing. | - |
dc.language | eng | - |
dc.publisher | Elsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jae | - |
dc.relation.ispartof | Journal of Accounting and Economics | - |
dc.rights | This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License. | - |
dc.subject | Pro Forma Earnings | - |
dc.subject | Valuation | - |
dc.subject | Regulation G | - |
dc.title | The valuation impact of reconciling pro forma earnings to GAAP earnings | - |
dc.type | Article | - |
dc.identifier.email | Zheng, L: lzheng@business.hku.hk | - |
dc.identifier.authority | Zheng, L=rp01126 | - |
dc.description.nature | postprint | - |
dc.identifier.doi | 10.1016/j.jacceco.2010.07.001 | - |
dc.identifier.scopus | eid_2-s2.0-79951517777 | - |
dc.identifier.hkuros | 170652 | - |
dc.identifier.volume | 51 | - |
dc.identifier.issue | 1-2 | - |
dc.identifier.spage | 186 | - |
dc.identifier.epage | 202 | - |
dc.identifier.isi | WOS:000288309300011 | - |
dc.publisher.place | Netherlands | - |
dc.identifier.issnl | 0165-4101 | - |