This paper investigates the association between firms’ EBITDA reporting practices in earnings announcements and their capital investment decisions. I find that firms that include EBITDA in their earnings announcements over-invest in capital, are smaller, and have lower market-to-book ratios and lower profitability than non-EBITDA-reporting firms. These results are not explained by opportunistic disclosure behavior. Specifically, the results provide little evidence that firms report EBITDA specifically when the EBITDA metric shows superior performance. The paper contributes to the prior literature in various ways. First, these results suggest that managers’ reliance on EBITDA leads them to overinvest, which is a form of real earnings management that – to the extent that it exists – is sustainable in a steady state as long as EBITDA is considered an appropriate performance measure. In addition, this paper provides new evidence on the inferior characteristics and implications of non-GAAP earnings. Lastly, the paper provides evidence that in contrast with prior literature, which claims that managements report opportunistically.