The BP oil spill and income classification shifting of oil and gas companies

Michael Lacina, Shanshan Pan and Steve Garner

Advances in accounting, 2024, vol. 65, issue C

Abstract: Literature has documented income classification shifting to increase core earnings. There has been little research on whether firms reduce income increasing classification shifting or classification shift to reduce core earnings - classify non-core items as core expenses. Also, research on classification shifting under non-market incentives is limited. We fill these gaps by examining the shifting behavior of oil and gas firms in response to the BP oil spill. The oil spill was an unexpected event that led to regulations and restrictions, as well as adverse publicity. This could have encouraged petroleum firms to suppress core earnings. We show that after the oil spill, (1) the likelihood of petroleum firms' classification shifting to inflate core earnings declines relative to other firms and (2) the likelihood of petroleum companies' shifting to report lower core earnings increases relative to other firms.

Keywords: BP oil spill; Income classification shifting; Core earnings; Political costs; Adverse publicity (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S088261102300055X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:advacc:v:65:y:2024:i:c:s088261102300055x

DOI: 10.1016/j.adiac.2023.100696

Access Statistics for this article

Advances in accounting is currently edited by Dennis Caplan

More articles in Advances in accounting from Elsevier
Bibliographic data for series maintained by Catherine Liu ().