The Value Relevance of Alternative Earnings Measures: A Comparison of Pro Forma, GAAP and Analysts Actuals*

The Value Relevance of Alternative Earnings Measures: A Comparison of Pro Forma, GAAP, and I/B/E/S Earnings

Journal of Accounting Auditing & Finance ◽

10.1177/0148558x1002500205 ◽

2010 ◽

Vol 25 (2) ◽

pp. 261-288 ◽

Cited By ~ 25

Author(s):

Gary M. Entwistle ◽

Glenn D. Feltham ◽

Chima Mbagwu

Keyword(s):

Value Relevance ◽

Pro Forma

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Do aggressive pro forma earnings-reporting firms have difficulty disclosing intellectual capital? Australian evidence

Journal of Intellectual Capital ◽

10.1108/jic-03-2017-0051 ◽

2018 ◽

Vol 19 (5) ◽

pp. 875-896 ◽

Cited By ~ 2

Author(s):

Yiru Yang

Keyword(s):

Intellectual Capital ◽

Fixed Effects ◽

Value Relevance ◽

Reporting Quality ◽

Ordinary Least Squares ◽

Annual Reports ◽

Content Type ◽

Pro Forma Earnings ◽

Signalling Theory ◽

Pro Forma

Purpose The purpose of this paper is to investigate whether aggressive pro forma earnings-reporting firms are difficult in relation to signalling sufficient intellectual capital (IC), and how the market reacts to aggressive pro forma earnings reporting. Design/methodology/approach Content analysis of 610 annual reports of Australian firms listed on the Australian Securities Exchange 200 is used to obtain IC information. Fixed-effects logistic and ordinary least squares (OLS) regressions are used to examine the hypotheses. Findings The study finds that aggressive pro forma earnings reporting is negatively and significantly associated with sufficient IC disclosure. Moreover, this paper finds that investors react favourably to aggressive pro forma earnings reporting, and believe that pro forma earnings have greater incremental value-relevance information than statutory earnings. Research limitations/implications The coding framework used in this study comprises 33 IC items. Other studies have used coding frameworks comprising fewer or more varied IC items. Therefore, when comparing the results of this and other studies, the interpretation of the findings must recognise the differences in approach. Practical implications Sufficient IC disclosure may help investors to distinguish high-reporting-quality firms and low-reporting-quality firms. The paper demonstrates that aggressive pro forma earnings-reporting firms, which are low-reporting-quality firms, are less likely to disclose sufficient IC. Originality/value This paper is the first to examine the relationship between aggressive pro forma reporting and IC disclosure. Moreover, this paper built a theoretical framework based on signalling theory to develop research hypotheses, which extend the research on IC underpinned by signalling theory.

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The Value Relevance of Alternative Earnings Measures: A Comparison of Pro Forma, GAAP and Analyst Actuals

SSRN Electronic Journal ◽

10.2139/ssrn.1080314 ◽

2007 ◽

Cited By ~ 1

Author(s):

Gary M. Entwistle ◽

Glenn Feltham ◽

Chima Mbagwu

Keyword(s):

Value Relevance ◽

Pro Forma

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DİĞER KAPSAMLI GELİR KALEMLERİ İLE İŞLETMENİN PİYASA DEĞERİ ARASINDAKİ İLİŞKİ

Business And Management Studies An International Journal ◽

10.15295/bmij.v1i3.22 ◽

2014 ◽

Vol 1 (3) ◽

pp. 269

Author(s):

Serhan Gürkan ◽

Yasemin Köse

Keyword(s):

Financial Performance ◽

Value Relevance ◽

Net Income ◽

Comprehensive Income ◽

Income Statement ◽

Other Comprehensive Income ◽

The Difference ◽

Gains And Losses

Other comprehensive income is the difference between net income as in the Income Statement and comprehensive income, and represents the certain gains and losses of the enterprise not recognized in the Profit or Loss Account. Value relevance of other comprehensive income is under discussion and considering other comprehensive income items all together might be misleading for financial performance. In the view of such information, discussing the value relevance of each other comprehensive income item, judgements are made.

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