This study investigates whether IPO firms inflate “core” earnings through classification shifting (i.e., misclassifying core expenses as income-decreasing special items) immediately prior to IPOs. We provide initial evidence that IPO firms engage in classification shifting in the pre-IPO period. Using hand-collect price and share information from IPO prospectuses, we find that pre-IPO classification shifting is positively associated with the price revision from the mid-point of the initial price range to the final offer price, suggesting that pre-IPO classification shifting influences IPO price formation. Furthermore, we find that pre-IPO classification shifting is negatively associated with post-IPO stock returns. Overall, our findings caution investors, auditors, and regulators that classification shifting, a seemingly innocuous accounting maneuver, can mislead investors in their IPO valuation and is associated with post-IPO underperformance.

中文翻译：

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IPO公司是否将费用分类错误？对IPO价格形成和IPO后股票表现的影响

这项研究调查了IPO公司是否在紧接IPO之前通过类别转换（即将核心费用错误分类为减少收入的特殊项目）来夸大“核心”收益。我们提供了原始证据，表明IPO公司在IPO之前就参与了类别转移。使用从IPO招股说明书中收集的价格和股票信息，我们发现IPO前的分类转变与从初始价格范围的中点到最终发行价格的价格修正呈正相关，这表明IPO前的分类转变是影响IPO价格形成。此外，我们发现IPO前的分类转移与IPO后的股票收益负相关。总体而言，我们的发现警告投资者，审计师和监管者，分类会发生变化，