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Classification shifting: Impact of firm life cycle
(Indian Institute of Management Ahmedabad, 2016-03-04)
Purpose - This paper examines whether firms in the decline stage of life cycle manipulate core or operating income through misclassification of operating expenses as income-decreasing special items. Design/methodology/approach ...
Earnings management strategies during financial distress
(Indian Institute of Management Ahmedabad, 2016-02-11)
We examine whether financial distress and its severity have a role to play in managers’ decisions with respect to the choice of earnings management strategies. Our results suggests that firms in initial stages of distress ...
Classification shifting: do managers’ real actions matter?
(Indian Institute of Management Ahmedabad, 2016-03)
McVay (2006) presents evidence that managers inflate core earnings by shifting operating expenses to special items. In this paper, we improve her model to estimate core earnings by controlling for a firm’s fundamental ...
Are auditors unable to detect classification shifting or merely not willing to report it? evidence from India
(Indian Institute of Management Ahmedabad, 2016-03)
Prior research suggests that Big-4 auditors fail to curb classification shifting in the countries with weak legal institutions. However, it is not known whether the auditors are unable to detect the use of this earnings ...