As usual, Matt Levine offers some insight into the issue, which I tend to agree with. He offers the following three scenarios:<p>1. GAAP, which is a man-made set of social conventions for how to present financial results, does not accurately reflect Company X&#x27;s economic reality and continuing future earnings power, while the pro forma results do. (Or, less strongly, GAAP is informative, but the pro forma numbers are also informative, about a different aspect of the company&#x27;s situation.) Investors know that it is a useful discipline to hold all companies to the GAAP social convention, but appreciate Company X&#x27;s efforts to provide them with more insight into its real economic position, and use the non-GAAP numbers to inform their own models.<p>2. The GAAP numbers are more or less right, the non-GAAP numbers are just fake and flattering, but investors, whose job it is to make intelligent decisions about the future earnings power of the company, ignore the non-GAAP numbers and focus on the GAAP numbers, which are after all reported prominently in the same press release.<p>3. The non-GAAP numbers are fake and flattering and all the investors are chumps who believe whatever management puts in the big font at the top of the press release.<p>Pretty much every discussion of non-GAAP accounting focuses exclusively on Possibility No. 3, which, as both an efficient-markets fundamentalist and an accounting post-modernist, I find by far the least plausible of the three possibilities. Anyway, here&#x27;s a column by Gretchen Morgenson with the pleasingly archetypal title &quot;Fantasy Math Is Helping Companies Spin Losses Into Profits.&quot;<p><a href="http:&#x2F;&#x2F;www.bloombergview.com&#x2F;articles&#x2F;2016-04-25&#x2F;investing-robots-and-goldman-deposits" rel="nofollow">http:&#x2F;&#x2F;www.bloombergview.com&#x2F;articles&#x2F;2016-04-25&#x2F;investing-r...</a>