What is it about?
The paper is providing evidence of international firms' behavior of shifting expenses from core earnings to extraordinary items (similarly to US firms) and the important role of a country legal system and the number of financial analysts' monitoring the firms in curbing this earnings management practice. Earnings management can make more difficult for financial statements' users to understand firms' financial and economic underlying performance.
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Why is it important?
Classification shifting is an earning management practice that is used by US and international firms. This practice can make more difficult for financial statements' users to understand firms' financial and economic performances. Finding two factors (country legal system and number of financial analysts monitoring the firms) that play a role in curbing this common practice is important to both financial statement users and standard setters.
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This page is a summary of: Classification Shifting in an International Setting: Investor Protection and Financial Analysts Monitoring, Journal of International Accounting Research, October 2013, American Accounting Association,
DOI: 10.2308/jiar-50439.
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