مقاله انگلیسی رایگان در مورد مدیریت سود با استفاده از طبقه بندی تغییر درآمد – الزویر ۲۰۱۸

There is a huge literature on earnings management under which accounting information can be manipulated in various ways to mask firms’ true economic performance. One recently established form of earnings management is classification shifting. This is based on the misclassification of items within the income statement but does not alter net income. McVay (2006) was the first to establish empirical evidence for classification shifting in the context of expense items. She found that US firms engage in this practice to manipulate core earnings by shifting core expenses from the cost of goods sold and selling, general, and administrative expenses to income-decreasing special items. Subsequent studies have also adduced empirical evidence that UK firms (Athanasakou, Strong, & Walker, 2011; Zalata & Roberts, 2016), as well as East Asian firms (Haw, Ho, & Li, 2011), misclassify core expenses as non-recurring expenses. The above studies examine the understatement of core expenses, which typically appear in the income statement after sales revenue, for the purpose of increasing core earnings. Firms, however, can also overstate core earnings by shifting non-operating revenues to operating revenues.1 In this paper, we examine this novel form of classification shifting as an earnings management tool. Specifically, we investigate and test whether firms misclassify non-operating revenues as operating revenues. The main theoretical motivation why firms may engage in classification shifting of revenues is based on investor perception of accounting information items. One strand of research proposes that investors assess the valuation relevance of earnings components based on their placement in the income statement (Bradshaw & Sloan, 2002; Davis, 2002). This suggests that investors appear to weight individual line items in the income statement differently and that operating revenues items tend to be accorded more weight since they have higher valuation relevance (e.g. Bartov & Mohanram, 2014). Another related strand of the literature establishes that the ability of an income statement line item to predict future earnings depends on its position in the income statement (e.g. Fairfield, Sweeney, & Yohn, 1996). In particular, it shows that line items closer to sales revenue are more likely to help predict future earnings. In this context, the misclassification of revenue items can be employed to boost operating revenues. Indeed, McVay (2006) observed that firms may shift non-operating revenues up the income statement but she left this type of classification shifting for future research. Furthermore, Curtis, McVay, and Whipple (2014) provided some evidence of flagrant opportunism in disclosing core earnings. They showed that managers disclose core profit without excluding non-operating revenues especially in cases when the inclusion of the latter allows them to meet their core earnings’ benchmark. Concern about reclassification has been shown by organisations such as the Securities and Exchange Commission (SEC). They were particularly worried about the misclassification of income statement line items such as improperly showing investment income or gains on disposals of assets as product or service revenue (SEC, 2000). As an anecdotal example, a global electrical engineering company ABB that has branches in countries such as the USA and the UK was able to misclassify continually revenues from the sale of fixed assets as operating revenues (Jones, 2011). Another example is IBM which shifted revenues from nonrecurring items (gains on asset sales) up the income statement to inflate core earnings (Bulkeley, 2002).