Purpose

This study aims to investigate whether managers of Japanese firms that adopt international financial reporting standards (IFRS) engage in earnings management by shifting core expenses to reported discontinued operations. Based on this purpose, the author also investigates the impact of continuing operations reporting on core earnings.

Design/methodology/approach

This study uses regression analysis mainly using the expected-core-earnings model (McVay, 2006) on a sample of Japanese firms adopting IFRS. The sample consists of 317 firm-year observations representing 48 Japanese firms that adopted IFRS from 2010 to 2018, noting that Japan has adopted IFRS since 2010.

Findings

The author finds that firms shift operating expenses of continuing operations to discontinued operations to increase core earnings. Additionally, the author desegregates reported discontinued operations into core and non-core earnings because previous literature assumes that firms engage in classification shifting using special items. Results reveal that firms use the classification shifting using negative non-core earnings of discontinued operations. Furthermore, the income-increasing discontinued operations negatively influence both current and future core earnings while income-decreasing discontinued operations do not.

Research limitations/implications

The result could rely on the efficiency of the expected core earnings model. The author intentionally use only the Japanese sample rather than a global sample to control the characteristics of each country that can be noise; it could be a bias of this study.

Practical implications

The author revealed that firms engaged in the classification shifting using negative non-core earnings of discontinued operations. Providing detailed information on discontinued operations, segmented core earnings and non-core earnings (special items) is necessary. Deficiency of details on discontinued operations can create information asymmetry between managers and investors. It can encourage managers to engage in opportunistically earnings management using discontinued operations, taking advantage of investors’ ignorance of the nature of the expenses allocated to discontinued operations.

Social implications

This study would be beneficial to investors by informing them of the potential usefulness and risks of IFRS because it is believed that IFRS is to be the predominant set of accounting standards in the world.

Originality/value

The author exposes a potential earnings management practice under IFRS by extending the literature on classification shifting through examining the relationship between unexpected core earnings and discontinued operations. The author extends prior research for classification, developing it to an investigation of the impact on core earnings, finding that income-increasing discontinued operations negatively influence core earnings, whereas income-decreasing discontinued operations do not. This study indicates that standard setters should pay close attention to the potential problems of line-item separations of discontinued operations.

中文翻译：

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使用终止业务的分类转移和对核心收益的影响：来自日本的证据

目的

本研究旨在调查采用国际财务报告准则 (IFRS) 的日本公司的经理是否通过将核心费用转移到已报告的已停业业务来进行盈余管理。基于此目的，作者还调查了持续经营报告对核心收益的影响。

设计/方法/方法

本研究主要使用预期核心收益模型（McVay，2006 年）对采用 IFRS 的日本公司样本进行回归分析。样本包含 317 家公司年度观察结果，代表 48 家日本公司在 2010 年至 2018 年间采用了 IFRS，并指出日本自 2010 年以来一直采用 IFRS。

发现

作者发现企业将持续经营的经营费用转移到中止经营以增加核心收益。此外，作者将报告的停产业务拆分为核心和非核心收益，因为之前的文献假设公司使用特殊项目进行分类转换。结果表明，公司使用已终止业务的负非核心收益进行分类转换。此外，收入增加的中止经营会对当前和未来的核心收益产生负面影响，而收入减少的中止经营则不会。

研究限制/影响

结果可能取决于预期核心收益模型的效率。作者有意仅使用日本样本而不是全球样本来控制每个国家的噪声特征。这可能是这项研究的偏见。

实际影响

作者透露，公司使用非核心业务的非核心收益进行分类转移。有必要提供关于已终止业务、分部核心收益和非核心收益（特殊项目）的详细信息。中断经营活动的细节不足会导致经理和投资者之间的信息不对称。它可以利用投资者对分配给已终止业务的费用性质的无知，鼓励管理人员利用已终止的业务进行机会主义的盈余管理。

社会影响

这项研究将有助于投资者了解 IFRS 的潜在用途和风险，因为人们相信 IFRS 将成为世界上主要的会计准则集。

原创性/价值

作者通过研究意外核心收益与终止经营之间的关系扩展了分类转移的文献，揭示了 IFRS 下潜在的盈余管理实践。作者扩展了先前的分类研究，将其发展为对核心收益影响的调查，发现收入增加的中止经营会对核心收益产生负面影响，而收入减少的中止经营则不会。本研究表明，标准制定者应密切关注停产业务的行项目分离的潜在问题。