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An International Meeting of American Accounting
Association
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The Impact of Non-GAAP Earnings and Interactive Data Displays on Earnings Evaluations and Investment Judgments |
William N. Dilla
Iowa State University
Diane J. Janvrin
Iowa State University
Cynthia Jeffrey
Iowa State University
Abstract: This study examines the effects of online display options for pro forma data on nonprofessional investors’ earnings and investment judgments. We find that presenting pro forma to GAAP earnings reconciliations on a separate, hyperlinked page has a positive effect on earnings judgments relative to a conventional textual format, which presents pro forma earnings and their reconciliation to GAAP measures on a single page. We also find that providing pro forma earnings data in interactive, graphical displays has no effect on earnings and investment judgments when text information also presents pro forma earnings. However, when text information presents GAAP earnings only, presenting interactive graphical displays of pro forma earnings has a negative effect on earnings and investment judgments. These findings suggest a need to further examine the effects of pro forma earnings presentation format in online financial disclosure environments.