Managing Earnings Using Classification Shifting: Evidence from Quarterly Special Items

2010 ◽  
Vol 85 (4) ◽  
pp. 1303-1323 ◽  
Author(s):  
Yun Fan ◽  
Abhijit Barua ◽  
William M. Cready ◽  
Wayne B. Thomas
Keyword(s):  
Fourth Quarter ◽  
Positive Relation ◽  
Cross Sectional ◽  
Earnings Expectations ◽  
Special Items ◽  
The Core ◽  
Classification Shifting ◽  
Earnings Benchmarks ◽  
Core Earnings

ABSTRACT: McVay (2006) concludes that managers opportunistically shift core expenses to special items to inflate current core earnings, resulting in a positive relation between unexpected core earnings and income-decreasing special items. However, she further notes that this relation disappears when contemporaneous accruals are dropped from the core earnings expectations model. McVay (2006) calls for research to improve the core earnings expectations model and to provide additional cross-sectional tests of classification shifting. Using a core earnings expectations model that is not dependent on accrual special items, we show that classification shifting is more likely in the fourth quarter than in interim quarters. We also find more evidence of classification shifting when the ability of managers to manipulate accruals appears to be constrained and in meeting a range of earnings benchmarks. Overall, our evidence provides broad support for McVay’s (2006) conclusion that managers engage in classification shifting. Our study also sheds new understanding of the conditions under which managers are more likely to employ classification shifting.

Motivations for Classification Shifting: A Systematic Review

2019 ◽  
Vol 11 (1) ◽  
pp. 29
Author(s):  
Nisreen Mohammed Almaleeh
Keyword(s):  
Systematic Review ◽  
Corporate Governance ◽  
Earnings Management ◽  
Ownership Structure ◽  
Financial Distress ◽  
Financial Statements ◽  
Special Items ◽  
Governance Environment ◽  
Classification Shifting ◽  
Earnings Benchmarks

The purpose of the current paper is to highlight the motivations that may encourage managements of firms to shift core expenses to special items in order to inflate core or operating earnings i.e. to practice classification shifting, which would have an effect on the decisions of financial statements' users. This was done through conducting a systematic review on the available literature about classification shifting. The most obvious findings to emerge from this study is that management may engage in classification shifting for the reason that it is less costly than other earnings management methods, the firm being in current or potential state of financial distress, the desire of the management of the firm to meet or beat earnings benchmarks, the ownership structure of the firm having some characteristics that encourage management to engage in such a practice, the firm performing in a weak corporate governance environment, or due to the fact that classification shifting is tough to be detected by external monitors compared to other earnings management methods.

Do IPO Firms Misclassify Expenses? Implications for IPO Price Formation and Post-IPO Stock Performance

2020 ◽  
Author(s):  
Xiaotao (Kelvin) Liu ◽  
Biyu Wu
Keyword(s):  
Stock Returns ◽  
Initial Public Offering ◽  
Price Formation ◽  
Special Items ◽  
Final Offer ◽  
Price Range ◽  
Classification Shifting ◽  
Core Earnings ◽  
Public Offering ◽  
Share Information

This study investigates whether initial public offering (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-collected price and share information from IPO prospectuses, we find that pre-IPO classification shifting is positively associated with a price revision from the midpoint 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. This paper was accepted by Brian Bushee, accounting.

The Rewards for Meeting or Beating Managers' Own Earnings Guidance

2020 ◽  
Author(s):  
Kai Wai Hui ◽  
Alfred Z. Liu ◽  
Yao Zhang
Keyword(s):  
Stock Return ◽  
Earnings Forecasts ◽  
Earnings Guidance ◽  
Cross Sectional ◽  
Earnings Expectations ◽  
Future Performance ◽  
Management Guidance ◽  
Prior Literature ◽  
Management Earnings Guidance ◽  
Analyst Earnings

This study documents a stock return premium for meeting or beating management's own earnings guidance (MBMG) that is separate and distinct from the premium for meeting or beating analysts' earnings forecasts (MBAF) documented in prior literature. Cross-sectional analyses reveal that the MBMG premium relative to the MBAF premium increases when management guidance is more informative. We also find that MBMG is incrementally informative about a firm's future performance after considering MBAF. Our findings suggest that investors consider management earnings guidance to be a performance threshold in addition to analyst earnings forecasts when forming earnings expectations.

scholarly journals Measures of Bioavailable Serum Testosterone and Estradiol and Their Relationships with Muscle Strength, Bone Density, and Body Composition in Elderly Men*

2000 ◽  
Vol 85 (9) ◽  
pp. 3276-3282 ◽  
Author(s):  
Annewieke W. van den Beld ◽  
Frank H. de Jong ◽  
Diederick E. Grobbee ◽  
Huibert A. P. Pols ◽  
Steven W. J. Lamberts
Keyword(s):  
Body Composition ◽  
Muscle Strength ◽  
Fat Mass ◽  
Cross Sectional Study ◽  
Positive Relation ◽  
Elderly Men ◽  
Cross Sectional ◽  
Healthy Elderly ◽  
Hip Bmd ◽  
Best Parameter

Abstract In the present cross-sectional study of 403 independently living elderly men, we tested the hypothesis that the decreases in bone mass, body composition, and muscle strength with age are related to the fall in circulating endogenous testosterone (T) and estrogen concentrations. We compared various measures of the level of bioactive androgen and estrogen to which tissues are exposed. After exclusion of subjects with severe mobility problems and signs of dementia, 403 healthy men (age, 73–94 yr) were randomly selected from a population-based sample. Total T (TT), free T (FT), estrone (E1), estradiol (E2), and sex hormone-binding globulin (SHBG) were determined by RIA. Levels of non-SHBG-bound T (non-SHBG-T), FT (calc-FT), the TT/SHBG ratio, non-SHBG-bound E2, and free E2 were calculated. Physical characteristics of aging included muscle strength measured using dynamometry, total body bone mineral density (BMD), hip BMD, and body composition, including lean mass and fat mass, measured by dual-energy x-ray absorptiometry. In this population of healthy elderly men, calc-FT, non-SHBG-T, E1, and E2 (total, free, and non-SHBG bound) decreased significantly with age. T (total and non-SHBG-T) was positively related with muscle strength and total body BMD (for non-SHBG-T, respectively, β = 1.93 ± 0.52, P < 0.001 and β = 0.011 ± 0.002, P < 0.001). An inverse association existed between T and fat mass (β = −0.53 ± 0.15, P < 0.001). Non-SHBG-T and calc-FT were more strongly related to muscle strength, BMD, and fat mass than TT and were also significantly related to hip BMD. E1 and E2 were both positively, independently associated with BMD (for E2, β = 0.21 ± 0.08, P < 0.01). Non-SHBG-bound E2 was slightly strongly related to BMD than total E2. The positive relation between T and BMD was independent of E2. E1 and E2 were not related with muscle strength or body composition. In summary, bioavailable T, E1, total E2, and bioavailable E2 all decrease with age in healthy old men. In this cross-sectional study in healthy elderly men, non-SHBG-bound T seems to be the best parameter for serum levels of bioactive T, which seems to play a direct role in the various physiological changes that occur during aging. A positive relation with muscle strength and BMD and a negative relation with fat mass was found. In addition, both serum E1 and E2 seem to play a role in the age-related bone loss in elderly men, although the cross-sectional nature of the study precludes a definitive conclusion. Non-SHBG-bound E2 seems to be the best parameter of serum bioactive E2 in describing its positive relation with BMD.

scholarly journals Prevalence of anti-HBc total positivity in an impoverished Urban Community in Banglades

2018 ◽  
Vol 43 (2) ◽  
pp. 63-70
Author(s):  
Dilip Kumar Ghosh ◽  
Chanchal Kumar Ghosh ◽  
Mukta Nath ◽  
Syed Alamgir Safwath ◽  
Santosh Kumar Saha ◽  
...  
Keyword(s):  
Hepatitis B Virus ◽  
Hepatitis B ◽  
Urban Community ◽  
Total Positivity ◽  
Population Based ◽  
Hepatitis B Vaccination ◽  
Systematic Sampling ◽  
Cross Sectional ◽  
The Core ◽  
B Virus

The infection with the Hepatitis B virus (HBV) is a global health problem. Hepatitis B virus (HBV) infections are rapidly spreading in developing countries due to the lack of health education, poverty, illiteracy and Hepatitis B vaccination. No widespread population based data of HBV is available in the country's aspect. So, a population-based serological survey was done to determine the prevalence of the Hepatitis B core antibody total (IgM+IgG) in an impoverished Urban Community in Dhaka, Bangladesh. A descriptive cross-sectional study was conducted among 384 healthy individuals and age between 18-60 years from the urban slum in Dhaka city. The study was implemented through collaboration with Shaheed Suhrawardy Medical College, Dhaka from January 2013 to June 2013. The study participants were selected through systematic sampling procedure and blood tested for anti-HBc. Anti-HBc estimations were carried out by VITROS Immune diagnostic assay. The study was pertained Ethical permission from Bangladesh Medical Research Council (BMRC) and every participant was informed regarding their written informed consent. Among the 384 respondents, 183(47.6%) individuals were positive for the core antibody of hepatitis B virus (anti-HBc). The anti HBc positive group consisted almost of equal number of male 93, (24.2%) and female 90 (23.4%). There was a significantly increasing prevalence of the core antibody among young adults and middle age of the respondents (28.7%). Major risk factors for exposure to Hepatitis B appeared to be Ear-nose-body piercing, Circumcision by Hajam, unsafe blood transfusion and unsterile dental intervention. High prevalence of hepatitis B Core antibody (47.6%) indicates that the members of this urban community are highly exposed to hepatitis B virus.

scholarly journals Another Look at the Macroeconomic Information Content of Aggregate Earnings: Evidence from the Labor Market

2020 ◽  
Author(s):  
Rebecca N. Hann ◽  
Congcong Li ◽  
Maria Ogneva
Keyword(s):  
Labor Market ◽  
Information Content ◽  
Job Creation ◽  
Job Destruction ◽  
Special Items ◽  
Macroeconomic Information ◽  
Earnings Components ◽  
Aggregate Earnings ◽  
Core Earnings ◽  
Near Term

We examine the macroeconomic information content of aggregate earnings from the labor market's perspective. We use insights from the labor economics literature to characterize the information contained in aggregate GAAP earnings and its components that is relevant for predicting aggregate job creation and destruction. Our results suggest that not only does aggregate earnings news convey information about future labor market aggregates, but its information content is incremental to other macroeconomic variables at near-term horizons. Further, the source of this information stems primarily from two earnings components: aggregate core earnings and special items. Shocks to core earnings signal persistent changes in economy-wide profitability that predict aggregate job creation up to four quarters ahead, while shocks to special items predict job destruction up to one quarter. Taken together, our results suggest that aggregate earnings contain useful information about future labor market conditions, with the nature of such information varying across earnings components.

Clustering Analysis of the Care Problems of People with Dementia Based on the Minimum Spanning Tree Algorithm: A Cross-sectional Study (Preprint)

2021 ◽  
Author(s):  
Minmin Leng ◽  
Yue Sun ◽  
Hui Chang ◽  
Zhiwen Wang
Keyword(s):  
Family Caregivers ◽  
Clustering Analysis ◽  
Spanning Tree ◽  
Minimum Spanning Tree ◽  
Cross Sectional Study ◽  
Sectional Study ◽  
Cross Sectional ◽  
The Core ◽  
People With Dementia ◽  
Care Problems

BACKGROUND Recognizing the correlations between care problems of people with dementia could be beneficial, as it may help clinicians choose treatment methods because related symptom groups may respond to the same treatment intervention. However, generalizable data on the prevalence of care problems and potential clusters of care problems in people with dementia in China remain unavailable. OBJECTIVE This study aimed to (1) evaluate the prevalence of various care problems of people with dementia, and (2) explore the core care problems and the correlation between care problems of people with dementia. METHODS A cross-sectional study design was adopted to identify the care problems of people with dementia reported by family caregivers. The questionnaire consisted of two parts. The first part was mainly socio-demographic questions of people with dementia. The second part was the care problems evaluation sheet which involved three aspects: daily living care problems, behavioral and psychological symptoms, and safety risks. Care problems of people with dementia were measured with this care problems evaluation sheet. Clustering analysis of the care problems based on Kruskal's minimum spanning tree (MST) algorithm was performed in the Jupyter Notebook software to explore the core care problems and the correlation between care problems. RESULTS A total of 687 participants were included in the analysis. In general, the prevalence of having difficulty in language performance, agitated behavior, incidence of falls was relatively higher in people with dementia, which distressed their family caregivers. Through the clustering analysis based on the Kruskal's MST algorithm, the 63 care problems were clustered into 7 clusters. The 7 core care problems were “Don't know how to dress in order”, “Refusing to take a bath”, “Bedridden”, “Hitting, kicking, pushing, or biting others”, “Pacing and aimless wandering”, “Complaining”, and “Choking on food”. CONCLUSIONS The prevalence of various care problems was high. Through the clustering analysis, care problems were clustered into 7 clusters and 7 core care problems were identified. The identity of just a few core care problems instead of a large number of them might have relevant clinical implications, in the sense that it may lead to a greater ease in the identification of underlying etiologies and to more rational treatments in people with dementia.

Fixing the Core, Earnings Management, and Sustainable Emergence From Financial Distress: Evidence From China’s Special Treatment System

2021 ◽  
pp. 0148558X2110511
Author(s):  
Jiao Jing ◽  
Kenneth Leung ◽  
Jeffrey Ng ◽  
Janus Jian Zhang
Keyword(s):  
Earnings Management ◽  
Financial Distress ◽  
Operating Efficiency ◽  
Special Treatment ◽  
Multiple Stakeholders ◽  
Listed Firms ◽  
The Core ◽  
Distressed Firms ◽  
Core Earnings

Throughout their business life cycle, firms may experience financial distress. Successful emergence from such distress is important to their multiple stakeholders. Using a sample of publicly listed firms in China that emerged from Special Treatment (an indicator of delisting risk), we focus on the key actions such firms take prior to emergence, namely, fixing the core of the business and earnings management. We examine how these actions are associated with sustainable emergence, which we define as emergence from Special Treatment without reentry in the next 5 years. Consistent with the expectation that shortcut fixes to problems do not yield a long-term solution, we find that repairing the core of the business by improving operating efficiency is positively associated with sustainable emergence, whereas earnings management is negatively associated with it. We also find that the positive (negative) association between fixing the core (earnings management) and sustainable emergence is pronounced only for state-owned enterprises. Our article adds to the limited literature that examines issues related to distressed firms’ sustainable turnaround.

Student Satisfaction Approach for Enhancing University Competitiveness

2020 ◽  
Vol 10 (2) ◽  
pp. 31-54
Author(s):  
Booysen Sabeho Tubulingane ◽  
Neeta Baporikar
Keyword(s):  
Student Satisfaction ◽  
Emerging Economies ◽  
Cross Sectional ◽  
Goods And Services ◽  
The Core ◽  
The World ◽  
Quantitative Descriptive ◽  
Teaching Learning ◽  
The Right ◽  
The University

Universities contribute to the creation of a knowledgeable and skilled national workforce. The world over, universities are hailed as one of the old forms of organizations that have been instrumental in contributing to the development of many nations by producing skilled and intellectual human resources needed to produce goods and services. For this role fulfillment, the universities must ensure student satisfaction as students are the core of the very existence of universities and most important stakeholders in the higher education scenario. Moreover, student satisfaction is likely to enhance not only the better teaching-learning process, knowledge transfer, but also the competitiveness of the universities. This is all the more relevant and probably the best way to adopt for the university to play their role effectively and also is competitive in emerging economies. Hence, adopting a quantitative descriptive cross-sectional research methodology, this study aims to deliberate on how student satisfaction is the right approach and can drive university competitiveness.

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