Do firms prefer one form of accounting gimmick over other to meet peer performance?
The current study explores whether firms engage in classification shifting to meet industry-average profitability. The study examines the different alternatives under classification shifting for meeting industry numbers. Based on a sample of 15,616 firm-years, results exhibit that firms misclassif...
| Main Author: | |
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| Format: | Article |
| Language: | English |
| Published: |
Penerbit Universiti Kebangsaan Malaysia
2021
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| Online Access: | http://journalarticle.ukm.my/17928/ http://journalarticle.ukm.my/17928/1/45971-170542-2-PB.pdf |
| _version_ | 1848814437100683264 |
|---|---|
| author | Bansal, Manish |
| author_facet | Bansal, Manish |
| author_sort | Bansal, Manish |
| building | UKM Institutional Repository |
| collection | Online Access |
| description | The current study explores whether firms engage in classification shifting to meet industry-average profitability. The
study examines the different alternatives under classification shifting for meeting industry numbers. Based on a sample
of 15,616 firm-years, results exhibit that firms misclassify the cost of goods sold as a non-operating expense to meet
the industry’s average gross margin ratio. Further empirical evidence provides that firms prefer shifting expenses
over shifting revenues to meet the industry’s average profitability. Overall, results imply that peer performance is an
important benchmark, and firms strive to achieve the same by engaging in different shifting strategies. The study is
among the pioneering attempts that document a form of classification shifting where gross profit and core earnings both
change as an effect of misclassification. The findings have important implications for auditors, investors, and analysts. |
| first_indexed | 2025-11-15T00:34:04Z |
| format | Article |
| id | oai:generic.eprints.org:17928 |
| institution | Universiti Kebangasaan Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T00:34:04Z |
| publishDate | 2021 |
| publisher | Penerbit Universiti Kebangsaan Malaysia |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | oai:generic.eprints.org:179282022-01-13T03:28:00Z http://journalarticle.ukm.my/17928/ Do firms prefer one form of accounting gimmick over other to meet peer performance? Bansal, Manish The current study explores whether firms engage in classification shifting to meet industry-average profitability. The study examines the different alternatives under classification shifting for meeting industry numbers. Based on a sample of 15,616 firm-years, results exhibit that firms misclassify the cost of goods sold as a non-operating expense to meet the industry’s average gross margin ratio. Further empirical evidence provides that firms prefer shifting expenses over shifting revenues to meet the industry’s average profitability. Overall, results imply that peer performance is an important benchmark, and firms strive to achieve the same by engaging in different shifting strategies. The study is among the pioneering attempts that document a form of classification shifting where gross profit and core earnings both change as an effect of misclassification. The findings have important implications for auditors, investors, and analysts. Penerbit Universiti Kebangsaan Malaysia 2021 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/17928/1/45971-170542-2-PB.pdf Bansal, Manish (2021) Do firms prefer one form of accounting gimmick over other to meet peer performance? Asian Journal of Accounting and Governance, 16 . pp. 23-35. ISSN 2180-3838 https://ejournal.ukm.my/ajac/issue/view/1432 |
| spellingShingle | Bansal, Manish Do firms prefer one form of accounting gimmick over other to meet peer performance? |
| title | Do firms prefer one form of accounting gimmick over other to meet peer performance? |
| title_full | Do firms prefer one form of accounting gimmick over other to meet peer performance? |
| title_fullStr | Do firms prefer one form of accounting gimmick over other to meet peer performance? |
| title_full_unstemmed | Do firms prefer one form of accounting gimmick over other to meet peer performance? |
| title_short | Do firms prefer one form of accounting gimmick over other to meet peer performance? |
| title_sort | do firms prefer one form of accounting gimmick over other to meet peer performance? |
| url | http://journalarticle.ukm.my/17928/ http://journalarticle.ukm.my/17928/ http://journalarticle.ukm.my/17928/1/45971-170542-2-PB.pdf |