A Theory of Principles-Based Classification

dc.contributor.author Konvalinka, Matjaž
dc.contributor.author Penno, Mark
dc.contributor.author Stecher, Jack
dc.date.accessioned 2020-12-01T01:02:04Z
dc.date.available 2020-12-01T01:02:04Z
dc.date.issued 2020-08-18
dc.description.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
dc.identifier.uri http://hdl.handle.net/10125/70556
dc.subject Classification Shifting
dc.subject Earnings Management
dc.subject Principles
dc.subject Rules
dc.subject Signaling
dc.title A Theory of Principles-Based Classification
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