Analysts' GAAP earnings forecasts and their implications for accounting research

• 成果类型: Article
• 署名作者: Bradshaw, Mark T.; Christensen, Theodore E.; Gee, Kurt H.; Whipple, Benjamin C.
• 署名单位: Boston College; University System of Georgia; University of Georgia; Stanford University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2018.01.003
• 发表日期: 2018
• 关键词: pro forma earnings; measurement error bias; cash flow forecasts; street earnings; relative informativeness; empirical-assessment; operating earnings; tail wag; expectations; incentives

摘要

We use newly available GAAP forecasts to document that traditionally-identified GAAP forecast errors contain 37% measurement error. Correcting for this measurement error, we settle a long-standing debate regarding investor preference for GAAP versus non-GAAP earnings and provide strong evidence of a preference for non-GAAP earnings. We also revisit the use of non-GAAP exclusions to meet analysts' forecasts when GAAP earnings fall short. Results indicate that 34% of these traditionally-identified meet-or-beat firms are misidentified due to measurement error, and this error masks evidence that firms more frequently exclude transitory rather than recurring expenses for meet-or-beat purposes.