| Summary: | 博士 === 元智大學 === 管理學院博士班 === 100 === This paper provides evidence bearing on the controversial debates about pro forma earnings information in the literatures. Pro forma earnings exclude normal income statement items that managers deem to be nonrecurring or non-representative of ongoing operations. Some studies identify pro forma information as managerial attempts to disclose a clearer picture of core earnings, while others regard them as attempts to mislead investors. The Securities and Exchange Commission has established Regulation G, which requires companies to quantitatively reconcile pro forma earnings with Generally Accepted Accounting Principles (GAAP) earnings. I find that analysts use pro forma earnings to revise their forecasting earnings, especially after the implementation of Reg. G. In addition, my results strongly hold for those pro forma press releases which contain directly comparable reconciliation of the GAAP and pro forma earnings numbers. Finally, analysts’ characteristics affect their extent of reliance on pro forma earnings. Specially, analyst characteristics serve as a partial explanation in its effects on the information value of pro forma earnings. I thus show that analysts appear to use pro forma earnings information in their forecasting revisions, and that Regulation G enhances the quality of pro forma earnings reporting.
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