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The Economic Research Institute, Stockholm School of Economics SSE/EFI Working Paper Series in Business Administration

No 2004:5:
The impact of pro forma profits on analyst forecasts: Some experimental evidence

Patric Andersson () and Niclas Hellman ()

Abstract: The trend of pro forma (non-GAAP) reporting has made it increasingly difficult for financial analysts and investors to evaluate company performance. This study investigates how pro forma reporting affects analysts’ judgments in a non-US experimental setting. The results show that analysts who received both pro forma and GAAP information made significantly higher EPS forecasts compared to analysts who only received GAAP information. The positive framing and the higher anchor level that the pro forma report creates are suggested explanations for this result.

Keywords: Financial analysts; analyst forecasts; pro forma profits; (follow links to similar papers)

20 pages, May 28, 2004

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This paper is published as:
Andersson, Patric and Niclas Hellman, (2007), 'Does pro forma reporting bias analyst forecasts?', European Accounting Review, Vol. 16, No. 2, pages 277-298



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