Purpose This paper aims to examine whether financially distressed firms manipulate core or operating income through the misclassification of operating expenses as income-decreasing special items. Design/methodology/approach This sample comprises firms in the USA with data from 1989 to 2010. The...

Purpose This paper aims to examine whether firms in the decline stage of lifecycle manipulate core or operating income through misclassification of operating expenses as income-decreasing special items. Design/methodology/approach The sample comprises of firms from an emerging market, India with...