Title: The impact of accounting comparability on classification shifting: evidence from UK companies

Authors: Wiem Dridi

Addresses: Finance and Accounting Department, University of Tunis El Manar, Tunis, Tunisia

Abstract: This study examines the impact of accounting comparability on classification shifting in UK public firms. Using De Franco et al.'s (2011) comparability measure and McVay's (2006) classification shifting model, we address a gap in existing literature by investigating this relationship. Our findings demonstrate a positive association between accounting comparability and classification shifting, confirming that comparable firms may engage in the misclassification of the income statement items to meet expectations while minimising the risk of detection. Additionally, the results indicate a negative relationship between accounting comparability proxies and discretionary accruals, providing evidence that comparability reduces the likelihood of firms engaging in accruals-based earnings management. This research contributes to understanding how accounting comparability influences earnings management practices, offering insights for policymakers and stakeholders aiming to improve financial statement transparency and reliability.

Keywords: accounting comparability; classification shifting; earnings management; core earnings; non-recurring expenses.

DOI: 10.1504/IJMFA.2025.148902

International Journal of Managerial and Financial Accounting, 2025 Vol.17 No.4, pp.399 - 419

Received: 13 Sep 2022
Accepted: 26 Nov 2023
Published online: 02 Oct 2025 *

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