Document Type : Research Paper

Authors

• Abas Aflatooni ¹
• Mohamad Khatiri ²

¹ Department of Accounting, Faculty of Economics and Social Sciences, Bu-Ali Sina University, Hamadan, Iran

² Department of Accounting, Takestan Branch, Islamic Azad University, Takestan, Iran

Abstract

Recent research has increasingly focused on earnings management through the classification shifting of income statement items. However, domestic studies have only minimally addressed this topic. While international research has extensively examined the impact of the COVID-19 pandemic on earnings management, there is a notable lack of empirical evidence concerning Iranian firms. This study investigates the presence of earnings management through classification shifting in Iranian firms, comparing the phenomenon during the COVID-19 outbreak with other periods. The analysis utilizes data from 137 firms listed on the Tehran Stock Exchange, covering 2012 to 2023, resulting in 1,644 observations. The models are estimated using the generalized least squares (GLS) approach, controlling for year and industry effects. The findings confirm the existence of earnings management through classification shifting among Iranian firms. Moreover, the results indicate that this practice intensified during the COVID-19 pandemic compared to other years. Robustness tests, which employed different time frames for the pandemic and decile-ranked values for research variables, corroborate the study's main findings.

Keywords

• COVID-19
• Classification Shifting
• Accounting Earnings Management
• Real earnings Management

Main Subjects

• Financial Accounting