...Mai Dao; Hongkang Xu; Trung Pham SYNOPSIS This study examines how auditors react to clients' engagement in classification shifting which refers to the intentional misallocation of line items within the income statement. We find that classification shifting is positively associated with audit fees...

... responses to earnings shortfalls. Prior studies that examine classification shifting involving firm-level transitory items find that investors do not fully disentangle shifting behavior in a timely manner ( McVay 2006 ; Haw et al. 2011 ; Alfonso, Cheng, and Pan 2015 ). This suggests that strategic...