Use this URL to cite or link to this record in EThOS: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.577673
Title: Managing earnings using classification shifting : an analysis of UK corporate behaviour
Author: Zalata, Alan
Awarding Body: University of Aberdeen
Current Institution: University of Aberdeen
Date of Award: 2013
Availability of Full Text:
Access from EThOS:
Full text unavailable from EThOS. Thesis embargoed until 28 Sep 2018
Access from Institution:
Abstract:
This thesis examines whether UK companies engage in classification shifting after the introduction of IFRS in 2005. While IFRS was issued to improve the quality of accounting practices and provides users with more useful and valuerelevant information, non-recurring items disclosures is less regulated under IFRS than under UK GAAP. Therefore, firms may have more opportunity to exercise their discretion on the classification of items within the income statement. Previous studies showed weak evidence of misclassification of recurring items within the income statements in the UK prior to the introduction of IFRS. However, it is unclear whether the flexibility under IFRS has affected the misclassification of recurring items within the income statement. The empirical results reveal that managers are more likely to exercise their discretion in the disclosure of non-recurring items following the adoption of IFRS. More specifically, it is found that managers are more likely to misclassify some recurring items as non-recurring before they engage in new debt contracts in the next period, and when classification shifting allows them to report core earnings increases. However, the results reveal that companies do not engage in classification shifting to avoid reporting core loss. This thesis also examines whether external auditors and corporate governance are able to mitigate classification shifting practices. The results show that high quality auditors are less likely to question the proper classification of recurring items. However, high quality internal governance in terms of board and audit committee are more likely to challenge management accounting practices, especially, the disclosure of exceptional items. These inferences are robust to a number of modelling specifications and variable definitions. The results collectively demonstrate that IFRS provides management with greater opportunity to misclassify some recurring items, and while external auditors do not mitigate such practices, strong internal governance do.
Supervisor: Not available Sponsor: Mansoura University ; Ministry of Higher Education ; Egypt
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID: uk.bl.ethos.577673  DOI: Not available
Keywords: Business enterprises ; Accounting
Share: