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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Kluwer Academic Publishers
Copyright © 1998 by Kluwer Academic Publishers
Business and Management; Accounting/Auditing; Corporate Finance; Public Finance
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