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http://hdl.handle.net/10125/70556A Theory of Principles-Based Classification
| File | Size | Format | ||
|---|---|---|---|---|
| HARC-2021 paper 176.pdf | 477.93 kB | Adobe PDF | View/Open |
Item Summary
| Title: | A Theory of Principles-Based Classification |
| Authors: | Matjaž Konvalinka Mark Penno Jack Stecher |
| Keywords: | Classification Shifting Earnings Management Principles Rules Signaling |
| Date Issued: | 18 Aug 2020 |
| Abstract: | We study a firm's decision to classify transactions as recurring or nonrecurring in a setting with no fixed classification scheme, but with the following principle: recurring transactions must be more persistent than nonrecurring ones. Under this principle, equilibrium firm behavior provides a new explanation for the observed relationship between income and classifications. Moreover, we find that market prices are more informative under principles-based classifications than they would be under a hypothetical, optimally chosen specific classification rule |
| URI: | http://hdl.handle.net/10125/70556 |
| Appears in Collections: |
17 Theory |
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