Analysts’ GAAP earnings forecasts and their implications for accounting research

Mark T. Bradshaw, Theodore E. Christensen, Kurt H. Gee, Benjamin C. Whipple

Research output: Contribution to journalArticlepeer-review

45 Scopus citations


We use newly available GAAP forecasts to document that traditionally-identified GAAP forecast errors contain 37% measurement error. Correcting for this measurement error, we settle a long-standing debate regarding investor preference for GAAP versus non-GAAP earnings and provide strong evidence of a preference for non-GAAP earnings. We also revisit the use of non-GAAP exclusions to meet analysts’ forecasts when GAAP earnings fall short. Results indicate that 34% of these traditionally-identified meet-or-beat firms are misidentified due to measurement error, and this error masks evidence that firms more frequently exclude transitory rather than recurring expenses for meet-or-beat purposes.

Original languageEnglish (US)
Pages (from-to)46-66
Number of pages21
JournalJournal of Accounting and Economics
Issue number1
StatePublished - Aug 2018

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics


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