Analysts' treatment of nonrecurring items in street earnings

• 成果类型: Article; Proceedings Paper
• 署名作者: Gu, ZY; Chen, T
• 署名单位: Carnegie Mellon University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2004.09.002
• 发表日期: 2004
• 关键词: pro forma earnings; value-relevance literature; gaap operating earnings; PRICES FULLY REFLECT; FUTURE EARNINGS; stock-prices; relative informativeness; accounting research; permanence; returns

摘要

Given the recent controversy over deviations of street earnings from GAAP earnings, we show that the nonrecurring items that analysts include in street earnings are more persistent and have higher valuation multiples than those items they exclude from street earnings. in addition, we find no evidence that the pricing differential between the included and excluded items leads to future abnormal returns. If, as analysts claim, the primary use of street earnings is to value a stock, then our results suggest that analysts do have expertise in processing earnings information and that certain items appear justifiably excluded. (C) 2004 Elsevier B.V. All rights reserved.