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Optimistic Reporting and Pessimistic Investing: Do Pro Forma Earnings Disclosures Attract Short Sellers?

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  • Theodore E. Christensen
  • Michael S. Drake
  • Jacob R. Thornock

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Suggested Citation

  • Theodore E. Christensen & Michael S. Drake & Jacob R. Thornock, 2014. "Optimistic Reporting and Pessimistic Investing: Do Pro Forma Earnings Disclosures Attract Short Sellers?," Contemporary Accounting Research, John Wiley & Sons, vol. 31(1), pages 67-102, March.
    • Handle: RePEc:wly:coacre:v:31:y:2014:i:1:p:67-102
    DOI: 10.1111/1911-3846.12009
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    Cited by:

    1. Theodore E. Christensen & Hang Pei & Spencer R. Pierce & Liang Tan, 2019. "Non-GAAP reporting following debt covenant violations," Review of Accounting Studies, Springer, vol. 24(2), pages 629-664, June.
    2. Hsu, Charles & Wang, Rencheng & Whipple, Benjamin C., 2022. "Non-GAAP earnings and stock price crash risk," Journal of Accounting and Economics, Elsevier, vol. 73(2).
    3. Mei Luo & Shuai Shao & Frank Zhang, 2018. "Does financial reporting above or below operating income matter to firms and investors? The case of investment income in China," Review of Accounting Studies, Springer, vol. 23(4), pages 1754-1790, December.
    4. Paul A. Griffin & Hyun A. Hong & Ivalina Kalcheva & Jeong‐Bon Kim, 2022. "Shorting activity and stock return predictability: Evidence from a mandatory disclosure shock," Financial Management, Financial Management Association International, vol. 51(1), pages 27-71, March.
    5. Jason V. Chen & Kurt H. Gee & Jed J. Neilson, 2021. "Disclosure Prominence and the Quality of Non‐GAAP Earnings," Journal of Accounting Research, Wiley Blackwell, vol. 59(1), pages 163-213, March.
    6. Bradshaw, Mark T. & Christensen, Theodore E. & Gee, Kurt H. & Whipple, Benjamin C., 2018. "Analysts’ GAAP earnings forecasts and their implications for accounting research," Journal of Accounting and Economics, Elsevier, vol. 66(1), pages 46-66.
    7. S. P. Kothari & Charles Wasley, 2019. "Commemorating the 50‐Year Anniversary of Ball and Brown (1968): The Evolution of Capital Market Research over the Past 50 Years," Journal of Accounting Research, Wiley Blackwell, vol. 57(5), pages 1117-1159, December.
    8. Claudia Arena & Simona Catuogno & Nicola Moscariello, 2021. "The unusual debate on non-GAAP reporting in the current standard practice. The lens of corporate governance," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 25(3), pages 655-684, September.
    9. Zhilan Feng & Zhilu Lin & Wentao Wu, 2022. "CEO Influence on Funds from Operations (FFO) Adjustment for Real Estate Investment Trusts (REITs)," The Journal of Real Estate Finance and Economics, Springer, vol. 65(3), pages 524-547, October.
    10. Mazouz, Khelifa & Wu, Yuliang, 2022. "Why do firm fundamentals predict returns? Evidence from short selling activity," International Review of Financial Analysis, Elsevier, vol. 79(C).
    11. Deng, Xiaohu & Gao, Lei & Kim, Jeong-Bon, 2020. "Short-sale constraints and stock price crash risk: Causal evidence from a natural experiment," Journal of Corporate Finance, Elsevier, vol. 60(C).
    12. Felix Thielemann & Tami Dinh & Helen Kang, 2019. "Non-GAAP Reporting and Debt Market Outcomes: Evidence from Regulation G," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 71(2), pages 169-203, May.
    13. Laurion, Henry & Sloan, Richard, 2022. "When does forecasting GAAP earnings entail unreasonable effort?," Journal of Accounting and Economics, Elsevier, vol. 73(1).
    14. Silvia Gardini & F. Marta L. Di Lascio & Franco Visani, 2017. "Opportunism in disclosing pro-forma indicators: rationale and contextual drivers," BEMPS - Bozen Economics & Management Paper Series BEMPS42, Faculty of Economics and Management at the Free University of Bozen.
    15. Nilabhra Bhattacharya & Theodore E. Christensen & Qunfeng Liao & Bo Ouyang, 2022. "Can short sellers constrain aggressive non-GAAP reporting?," Review of Accounting Studies, Springer, vol. 27(2), pages 391-440, June.
    16. Theodore E. Christensen & Enrique Gomez & Matthew Ma & Jing Pan, 2021. "Analysts’ role in shaping non-GAAP reporting: evidence from a natural experiment," Review of Accounting Studies, Springer, vol. 26(1), pages 172-217, March.
    17. Xia Chen & Qiang Cheng & Ting Luo & Heng Yue, 2020. "Short Sellers and Long‐Run Management Forecasts," Contemporary Accounting Research, John Wiley & Sons, vol. 37(2), pages 802-828, June.
    18. Asher Curtis & Neil L. Fargher, 2014. "Does Short Selling Amplify Price Declines or Align Stocks with Their Fundamental Values?," Management Science, INFORMS, vol. 60(9), pages 2324-2340, September.
    19. Charitou, Andreas & Floropoulos, Nikolaos & Karamanou, Irene & Loizides, George, 2018. "Non-GAAP Earnings Disclosures on the Face of the Income Statement by UK Firms: The Effect on Market Liquidity," The International Journal of Accounting, Elsevier, vol. 53(3), pages 183-202.
    20. Jeremiah W. Bentley & Theodore E. Christensen & Kurt H. Gee & Benjamin C. Whipple, 2018. "Disentangling Managers’ and Analysts’ Non‐GAAP Reporting," Journal of Accounting Research, Wiley Blackwell, vol. 56(4), pages 1039-1081, September.
    21. Edith Leung & David Veenman, 2018. "Non‐GAAP Earnings Disclosure in Loss Firms," Journal of Accounting Research, Wiley Blackwell, vol. 56(4), pages 1083-1137, September.
    22. Haiyan Jiang & Ahsan Habib & Mostafa Monzur Hasan, 2022. "Short Selling: A Review of the Literature and Implications for Future Research," European Accounting Review, Taylor & Francis Journals, vol. 31(1), pages 1-31, January.
    23. Kannan, Yezen & Khallaf, Ashraf & Gleason, Kimberly & Bostan, Ibrahim, 2023. "The relationship between R&D intensity, conservatism, and management earnings forecast issuance," Advances in accounting, Elsevier, vol. 62(C).
    24. Mark Brosnan & Keith Duncan & Tim Hasso & Janice Hollindale, 2023. "Non‐GAAP earnings and executive compensation: An experiment," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(4), pages 4375-4398, December.
    25. Qianyun Huang & Terrance R. Skantz, 2016. "The informativeness of pro forma and street earnings: an examination of information asymmetry around earnings announcements," Review of Accounting Studies, Springer, vol. 21(1), pages 198-250, March.

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