 Do shifting practices vary across the firm life cycle?Manish Bansal Australian Journal of Management, 2024, vol. 49, issue 2, 142-169 Abstract: Prior research documents that managers engage in revenue shifting and expense shifting to report inflated operating performance of firms. This study extends this research in a new direction by investigating the relationship between revenue shifting and expense shifting across the firm life cycle. The study posits and finds that firms during the low life cycle stages (particularly, introductory and growth stage) prefer expense shifting over revenue shifting, whereas firms during the high life cycle stages (particularly, mature and decline stage) prefer revenue shifting over expense shifting for managing earnings, implying that firms choose the shifting tool based on ease, need, and relative advantage of each tool. Our subsequent tests suggest that the effect of expense (revenue) shifting is more pronounced among low (high) life cycle stage firms when they are small (large) and young (old). These results are robust to control for other tools of earnings management, and alternative measures of shifting practices and firm life cycle. The findings aware auditors and analysts of the shifting practices of firms operating at high and low life cycle stages. JEL Classification: M41, M48 Keywords: Classification shifting; expense shifting; firm life cycle; fraud triangle theory; revenue shifting (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:49:y:2024:i:2:p:142-169 DOI: 10.1177/03128962221131353 Access Statistics for this article More articles in Australian Journal of Management from Australian School of Business |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.