Gross Profit Manipulation through Classification Shifting: Evidence from the Egyptian Environment. | ||
| المجلة العلمية للدراسات التجارية والبيئية | ||
| Article 47, Volume 12, Issue 4, October 2021, Pages 185-240 PDF (1.07 M) | ||
| Document Type: المقالة الأصلية | ||
| DOI: 10.21608/jces.2021.218619 | ||
| Author | ||
| Amr Nazieh Mahmoud Ezat* | ||
| Associate Professor, Accounting Department, Faculty of Commerce, Mansoura University | ||
| Abstract | ||
| The existing studies about classification shifting in the income statements concentrate mainly on the misclassification of core expenses items as non- recurring expenses items, in order to manipulate core earnings. This study aims to extend the previous studies of classification shifting by examining the potential shifting of not only expenses items but, also, revenue items in order to inflate gross profit. By using a sample of 494 Egyptian listed firm-years observations in the period from 2016 to 2018, this study investigates the manipulation of gross profit through the shifting of both Costs of Goods Sold (COGS) to Selling, General and Administrative (SG&A) expenses and, also, the shifting of other Operating Incomes (OI) to total operating revenues. The results indicate that Egyptian listed firms are more likely to engage in classification shifting of revenues but not in classification shifting of expenses. Further, this study provides evidence of the impact of institutional ownership on classification shifting of expenses and, also, the impact of governmental ownership on the classification shifting of revenues. | ||
| Keywords | ||
| Classification shifting; gross profit manipulation; earnings management; ownership structure; Egyptian environment | ||
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