Cost Classification Shifting on Earnings Predictability of Listed Firms in Kenya

Ndungu Beatrice Wanjiru, Tobias Olweny and Gordon Opuodho
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Ndungu Beatrice Wanjiru: Tutorial Fellow, School of Business Economics and Humanities, Mama Ngina University College
Tobias Olweny: School of Business and Economics, Jomo Kenyatta University of Agriculture and Technology, Kenya
Gordon Opuodho: School of Business and Economics, Jomo Kenyatta University of Agriculture and Technology, Kenya

International Journal of Research and Innovation in Social Science, 2025, vol. 9, issue 6, 3938-3949

Abstract: Purpose: Cost classification shifting is a key managerial accounting practice that influences the predictability of earnings in listed firms. This study examines how cost classification shifting impacts earnings predictability among firms listed on the Kenya Methodology: This research utilizes panel regression analysis to examine how reclassifying costs affects the predictability of earnings, and the findings indicate a significant inverse relationship between the two. Sales, Selling general and Administrative costs as well as share price and Earnings per share data was collected for a purposive sample of 50 firms in listed in Kenya between 2010 and 2022 Findings: The overall firms analysis revealed a significant negative correlation between cost classification shifting and earnings predictability (r = -0.296, p

Date: 2025
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