Purpose

The authors aim at investigating different forms of classification shifting (CS). CS is a novel form of earnings management under which managers misclassify income statement line items and cash flow statement line items with an intent to report favorable operating performance of firms. In particular, the authors check the existence of revenue misclassification, expense misclassification and cash flows misclassification among Indian firms by taking the uniform sample of firms over a single period.

Design/methodology/approach

Operating revenue model (Malikov et al., 2018), core earnings expectation model (McVay, 2006) and operating cash flows model (Roychowdhury, 2006) are employed for measuring revenue misclassification, expense misclassification and cash flows misclassification, respectively. The panel data regression models are used to analyze the data for this study.

Findings

Based on the sample of 12,870 Bombay Stock Exchange (BSE) listed firm-years observations between 2010 and 2018, we find that, on average, Indian firms are engaged in revenue misclassification rather than expense misclassification to report inflated core earnings. Firms are found to be engaged in cash flows misclassification too. Besides, we find that magnitude of shifting is greater among larger firms. Results also establish that adoption of Ind AS increases the scope of shifting practices. These results are based on several robustness checks.

Practical implications

The results suggest that investors conduct a comprehensive review of the items of financial statements before using them in their portfolio valuation. It suggests auditors check the basis of revenue classification and standard-setting authorities, like ICAI in India, to make more mandatory disclosure requirements for classification of revenues and cash flows. It suggests lenders not to make lending decisions by looking at the operating performance metrics, as CS is the most preferred tool to positively influence the perception of lenders toward operating performance.

Originality/value

It is the first study that investigates different forms of classification shifting jointly for a sample of firms. Most of the earlier studies have examined one kind of classification shifting at a time. This study adds to the existing literature on earnings management by documenting that some firm-specific factors pressurize firms to prefer one form of shifting over another to report inflated core earnings.

中文翻译：

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印度公司是否通过分类转移来报告虚增的核心收益？

目的

作者旨在研究不同形式的分类转换 (CS)。CS 是一种新的盈余管理形式，在这种形式下，管理者错误地分类损益表项目和现金流量表项目，目的是报告公司的良好经营业绩。特别是，作者通过在单一时期内对公司的统一样本进行检查，检查印度公司之间是否存在收入错误分类、费用错误分类和现金流错误分类。

设计/方法/方法

营业收入模型（Malikov et al.，2018）、核心收益预期模型（McVay，2006）和经营现金流模型（Roychowdhury，2006）分别用于衡量收入错误分类、费用错误分类和现金流错误分类。面板数据回归模型用于分析本研究的数据。

发现

根据 2010 年至 2018 年间 12,870 家孟买证券交易所 (BSE) 上市公司年观察的样本，我们发现，平均而言，印度公司从事收入错误分类而不是费用错误分类以报告虚增的核心收益。发现公司也参与了现金流量错误分类。此外，我们发现较大公司之间的转移幅度更大。结果还表明，采用 Ind AS 增加了转变实践的范围。这些结果基于若干稳健性检查。

实际影响

结果表明，投资者在将财务报表项目用于投资组合估值之前对其进行全面审查。它建议审计师检查收入分类的基础和标准制定机构，如印度的 ICAI，对收入和现金流的分类制定更多的强制性披露要求。它建议贷方不要通过查看运营绩效指标来做出贷款决策，因为 CS 是对贷方对运营绩效的看法产生积极影响的最首选工具。

原创性/价值

这是第一项针对企业样本联合调查不同形式的分类转移的研究。大多数早期的研究一次检查了一种分类转移。本研究通过记录一些特定于公司的因素迫使公司更喜欢一种形式的转移而不是另一种形式来报告虚增的核心收益，从而增加了现有的关于盈余管理的文献。