The Impact of Financial Statement Comparability on Income Classification Shifting: Evidence from Egypt

Elsayed, Mohamed Saber Hamouda; Elkholy, Osama Abd Almonem Abd Alhamid; Marzouk, Mahmoud

doi:10.21608/abj.2023.314631

The Impact of Financial Statement Comparability on Income Classification Shifting: Evidence from Egypt

المؤلفون

Faculty of Commerce, Menoufia University

10.21608/abj.2023.314631

المستخلص

Purpose – This study examines the impact of financial statement comparability (FSC) on income classification shifting (ICS) measured by expenses classification shifting (ECS) and revenues classification shifting (RCS).
Design/methodology/approach – The study uses a quantitative approach to measure the impact of FSC on ICS for a sample of 62 Egyptian-listed firms for the period 2018-2021. The logistic regression analysis and Kruskal-Wallis test were run to test the hypotheses.
Findings – The results demonstrate a significant negative impact of FSC on ICS. The study reveals significant differences among the Egyptian Stock Exchange (ESE) sectors regarding RCS, but no significant differences were found concerning ECS and FSC.
Originality/value – The study contributes to the existing literature by examining the impact of FSC on ICS that could help regulators and accounting standards setters to alleviate ICS and thus mitigate earnings management in the Egyptian environment. Our findings are of particular importance for investors to help them make better decisions by improving the quality of information related to core earnings. Moreover, the study provides evidence related to the emerging market of Egypt.

الكلمات الرئيسية