The value relevance of alternative performance measures : empirical evidence from the Oslo stock exchange

Abstract

Companies disclose alternative performance measures, either to provide useful information to the market, or for strategic purposes which can be misleading. Using traditional price regressions, this study examines the value relevance of alternative performance measures and whether alternative performance measures are more value relevant than financial statement measures. The sample consists of the 100 largest companies on the Oslo Stock Exchange with quarterly data from 2012 to 2016. We found alternative performance measures to be value relevant for investors on the Oslo Stock Exchange. Further, we conclude that alternative performance measures are more value relevant than financial statement measures; however, this result should be interpreted with caution due to limited statistically significant results. The findings of this study suggest that companies disclose alternative performance measures to inform rather than mislead the market. Keywords: Alternative Performance Measures; Non-GAAP Measures; Pro Forma; Value Relevance