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    The impact of religion on classification shifting in the presence of corporate governance and BIG 4 audit

    Mamatzakis, Emmanuel and Boahen, E.O. (2020) The impact of religion on classification shifting in the presence of corporate governance and BIG 4 audit. Accounting Forum 44 (2), pp. 103-131. ISSN 0155-9982.

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    This study examines the extent to which religious socials norms of the firm's environment would affect classification shifting and whether such impact would be altered in the presence of firm specific corporate governance characteristics, such as board independence and BIG4 audit. Using a sample of 23,164 US firm-year observations between 2000 and 2015, we find that managers would be deterred to shift revenue items and core expenses from/into special items so as to inflate core earnings in a religious social norm's environment. The religion through the ethical channel would act as a deterrent to unethical managerial behaviour such as classification shifting. We also show that the religion would complement corporate governance and auditor characteristics to mitigate classification shifting. We report results with some variability as we examine the ethical role of religion in reducing classification shifting in rural vs urban areas, in low vs high religious areas, as well as in pre and post financial crisis periods. Finally, we show that regulation also plays a role as the SOX Act (2002) appears to curb opportunistic managerial behaviour, even more so in a religious social norm's environment.


    Item Type: Article
    Additional Information: This is an Accepted Manuscript of an article published by Taylor & Francis, available online at the link above.
    Keyword(s) / Subject(s): Classification shifting, religiosity, corporate governance, BIG4 audit
    School: Birkbeck Faculties and Schools > Faculty of Business and Law > Birkbeck Business School
    Research Centres and Institutes: Accounting and Finance Research Centre
    Depositing User: Emmanuel Mamatzakis
    Date Deposited: 03 Mar 2020 13:54
    Last Modified: 02 Aug 2023 17:57


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