Regulation G requires all companies to quantitatively reconcile pro forma earnings with GAAP earnings. This paper provides three findings related to the impact of reconciliations on mispricing of pro forma earnings. First, prior to Reg G, we find that mis-pricing of pro forma earnings is limited...

We hypothesize that employees prefer conservative accounting. We test our hypothesis, using the setting of the German law on codetermination. The law mandates half of the board seats to be filled by employee representatives if the firm’s number of domestic employees (DE) exceeds the threshold...