Discussion of “Evaluating Non-GAAP Performance Measures in the REIT Industry”

Discussion of “Evaluating Non-GAAP Performance Measures in the REIT Industry” Review of Accounting Studies, 3, 131–135 (1998) ° c 1998 Kluwer Academic Publishers, Boston. Manufactured in The Netherlands. Discussion of “Evaluating Non-GAAP Performance Measures in the REIT Industry” RICHARD SLOAN sloanr@umich.edu University of Michigan, School of Business Administration, 701 Tappan Street, Ann Arbor, MI 48109-1234 The stated goal of Fields, Rangan, and Thiagarajan (FRT hereafter) is to evaluate the use- fulness of non-generally accepted accounting principles (GAAP) accounting measures in the real estate investment trust (REIT) industry. A key strength of their study is that the REIT industry provides great potential as a setting for evaluating non-GAAP performance measures. Most REITs routinely report funds from operations (FFO) as an alternative to GAAP earnings as a measure of periodic performance. Indeed, use of FFO is so common- place that First Call, an agency that gathers information on analysts’ earnings forecasts, gathers information on FFO rather than earnings for REITs. A small number of REITs also voluntarily disclose estimates of the current value of their properties in addition to the required historical cost-based GAAP values. Since the properties comprise the major assets of REITs, the current value disclosures should, in theory, provide important information about the value of the REIT. The http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Accounting Studies Springer Journals

Discussion of “Evaluating Non-GAAP Performance Measures in the REIT Industry”

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 1998 by Kluwer Academic Publishers
Subject
Business and Management; Accounting/Auditing; Corporate Finance; Public Finance
ISSN
1380-6653
eISSN
1573-7136
D.O.I.
10.1023/A:1009632518065
Publisher site
See Article on Publisher Site

Abstract

Review of Accounting Studies, 3, 131–135 (1998) ° c 1998 Kluwer Academic Publishers, Boston. Manufactured in The Netherlands. Discussion of “Evaluating Non-GAAP Performance Measures in the REIT Industry” RICHARD SLOAN sloanr@umich.edu University of Michigan, School of Business Administration, 701 Tappan Street, Ann Arbor, MI 48109-1234 The stated goal of Fields, Rangan, and Thiagarajan (FRT hereafter) is to evaluate the use- fulness of non-generally accepted accounting principles (GAAP) accounting measures in the real estate investment trust (REIT) industry. A key strength of their study is that the REIT industry provides great potential as a setting for evaluating non-GAAP performance measures. Most REITs routinely report funds from operations (FFO) as an alternative to GAAP earnings as a measure of periodic performance. Indeed, use of FFO is so common- place that First Call, an agency that gathers information on analysts’ earnings forecasts, gathers information on FFO rather than earnings for REITs. A small number of REITs also voluntarily disclose estimates of the current value of their properties in addition to the required historical cost-based GAAP values. Since the properties comprise the major assets of REITs, the current value disclosures should, in theory, provide important information about the value of the REIT. The

Journal

Review of Accounting StudiesSpringer Journals

Published: Oct 6, 2004

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