2004 ABO Outstanding Dissertation Award
Announcement and Abstract

Announcement

The winner of the 2004 ABO Outstanding Dissertation Award is Brooke Elliott, currently an assistant professor of accounting at University of Illinois at Urbana–Champaign. Brooke’s dissertation, entitled "Emphasis and Information Display of Non-GAAP Earnings Measures: Effects on Professional and Non-Professional Investor Judgments and Decisions," was completed at the University of Washington under the supervision of Jane Kennedy. Both Brooke and Jane will be honored with plaques and Brooke will receive a $1,000 cash award and will be invited to present her paper at the upcoming ABO Section Research Conference (October 15-16, 2004 in Chicago, Illinois).

The 2004 ABO Outstanding Dissertation Award Committee was made up of:

Theresa Libby, Chair (Wilfrid Laurier University),
R. Murray Lindsay (University of Western Ontario),
Lisa Sedor (University of Notre Dame), and
Jeff Wilks (Brigham Young University).

The committee would like to extend their congratulations to both Brooke and Jane for a job well done.

Abstract

Emphasis and Information Display of Non-GAAP Earnings Measures:
Effects on Professional and Non-Professional Investor Judgments and Decisions

W. Brooke Elliott, University of Illinois at Urbana-Champaign
(Supervisor: Jane Kennedy, University of Washington)

This study investigates how managers’ strategic emphasis on non-GAAP earnings measures in quarterly earnings press releases and the format in which they disclose the differences between GAAP and non-GAAP earnings measures influence investors’ judgments and decisions. It also investigates whether this influence differs depending on investor sophistication. The results indicate that non-professional investors’ judgments are influenced by the emphasis placed on a pro forma profit relative to a GAAP loss and not simply the presence of the pro forma disclosure in the press release. The extent to which the relative emphasis of the two earnings figures affects non-professional investors’ judgments is diminished if the pro forma and GAAP earnings statements are displayed in a side-by-side reconciliation as opposed to a sequential presentation. Professional investors’ judgments are not influenced by the pro forma disclosure when the earnings statements are presented sequentially. However, professional investors’ judgments are influenced by the pro forma disclosure when the differences between the pro forma and GAAP figures are disclosed in a side-by-side reconciliation.