دانلود رایگان مقاله انگلیسی مدیریت درآمد با استفاده از طبقه بندی تغییر درآمد - الزویر 2018

ABSTRACT

This paper examines a novel form of classification shifting as an earnings management tool using a sample of 12,804 UK listed firm-year observations for the 1995-2014 period. It proposes a new approach to classification shifting whereby firms have scope to misclassify revenues from non-operating activities as operating revenues. The results establish that firms engage in classification shifting of non-operating revenues to inflate operating revenues. They indicate that firms in the period following mandatory IFRS adoption are associated with an increase in this practice, consistent with IFRS offering greater scope for manipulation. Further tests reveal that classification shifting of revenues is more pervasive for firms that report operating losses or have low growth.

5. Conclusions

This paper examines a novel form of classification shifting as an earnings management tool. More specifically, it is the first study that directly investigates whether firms use classification shifting of revenues by misclassifying non-operating revenues as operating revenues. Firms have incentives to employ this manipulation method as financial statement users value income statement line items differently and they give more value to operating revenues items (Bradshaw & Sloan, 2002; Davis, 2002). Moreover, an increase in operating revenues is valued more highly by investors than a corresponding decrease in operating expenses (Ertimur et al., 2003; Marguardt & Wiedman, 2004). Using a sample of 12,804 UK listed firm-year observations for the 1995-2014 period, we find that firms engage in classification shifting of revenues to inflate operating revenues, in line with the incentives for increasing such income statement line items.

The paper also examines the effect of mandatory IFRS adoption on the use of classification shifting of revenues to determine if it has changed the scope for management to engage in this particular form of earnings management. The results indicate that firms engage in classification shifting of revenues more to increase operating revenues in the post-IFRS period compared to the pre-IFRS period. This suggests that IFRS offers more scope for the misclassification of income statement items, in line with Zalata and Roberts (2017). Furthermore, our supplementary tests show that classification shifting of revenues is more pervasive for firms that report operating losses or have low growth. Overall, the results provide evidence that misclassification takes place not only using expense items (Fan & Liu, 2017; McVay, 2006) but also using revenue items.