The 1986 Tax Reform Act (TRA-86) reduced regular tax rates effective for tax years beginning after 1986. Firms in the highest marginal tax bracket in 1986 had an increased incentive to defer taxable income from 1986 to later years. Scholes, Wilson and Wolfson (1992) found that firms shifted...

We re-investigate the market pricing of special items, with particular emphasis on how managers “frame” these non-operating earnings components via their inclusion or exclusion from “street” earnings, the earnings numbers that firms disclose in their press releases and that analysts...

We re-investigate the market pricing of special items, with particular emphasis on how managers “frame” them via their inclusion or exclusion from “street” earnings. When managers include the special items in “street” earnings (i.e., “street” = GAAP), the market overprices them,...