The impact of pro forma profits on analyst forecasts: Some experimental evidence

Patric Andersson () and Niclas Hellman ()
Additional contact information
Patric Andersson: Center for Economic Psychology, Postal: Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden
Niclas Hellman: Department of Accounting and Managerial Finance, Postal: Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden

No 2004:5, SSE/EFI Working Paper Series in Business Administration from Stockholm School of Economics

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 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2004-05-28
New Economics Papers: this item is included in nep-acc, nep-cbe and nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in European Accounting Review, 2007, pages 277-298.

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Persistent link: https://EconPapers.repec.org/RePEc:hhb:hastba:2004_005

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