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Pro Forma Earnings: Article Analysis

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Financial Reporting Regulation and the Reporting of Pro Forma Earnings is a empirical study that examines the effect of SOX financial regulations on pro forma reporting behavior. The authors of this study use the S&P 500 for their study. Advocates of pro forma suggest that information from pro forma statements provide useful information that is in demand; while, critics of pro forma believe it to be misleading, especially to the more naive, amateur investor. Pro forma offers alternative methodology to GAAP and can allow management to display more predictability for the future under cirumstances where GAAP has less predictive value for investors. The question is, does this happen or is pro forma used to mislead? There is information in this

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