What sample of firms did the authors use

Reference no: EM132752721

Question - Companies often voluntarily provide non-GAAP earnings when they announce annual or quarterly earnings. These numbers are controversial as they represent management's view of permanent earnings. The Sarbanes-Oxley Act (SOX), issued in 2002, requires that if non-GAAP earnings are included in any periodic or other report filed with the SEC or in any public disclosure or press release, the company also must provide reconciliation with earnings determined according to GAAP. Professors Entwistle, Feltham, and Mbagwu, in "Financial Reporting Regulation and the Reporting of Pro Forma Earnings," examine whether firms changed their reporting practice in response to the regulations included in SOX.

Required - Read the article, "Financial Reporting Regulation and the Reporting of Pro Forma Earnings". Answer the following:

1. What sample of firms did the authors use in their examination?

2. What percent of firms reported non-GAAP earnings (referred to as pro forma earnings by the authors) in 2001? In 2003?

3. What was the most frequently reported adjusting item in 2001? In 2003?

4. What are the authors' main conclusion of the impact of SOX on non-GAAP reporting?

5. Is this conclusion still true today? Provide at least two references to support your answer.

Reference no: EM132752721

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