“The effects of non-GAAP disclosures on analyst forecasting accuracy”
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This explorative study investigates whether and how non-GAAP disclosures made by firms listed on the Eurostoxx 600 affect analyst forecasting accuracy. In addition, the study categorizes the non-GAAP measures in four different categories, i.e., non-GAAP disclosure related to net income, operating income EBIT/EBITDA and cashflows, to explore whether these different categories have different effects on analyst forecasting accuracy. Opportunistic and informative non-GAAP disclosure are differentiated since they might have different results on analyst forecasting accuracy. Using Panel data, the results show that the effects of non-GAAP disclosure on analyst forecast accuracy are mixed and vary among different types of non-GAAP disclosures and statistical methods. The results of this paper are academically relevant since this paper is the first paper which investigates the effects of different types of non-GAAP disclosures separately and since it is focusses on Europe whereas most research related to non-GAAP disclosure related to non-GAAP disclosure focusses on the United States or Australia. The results of the paper are relevant to investors since it helps them to decide whether the non-GAAP disclosure are useful for their forecasts.
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