Classification Shifting of Income Statement Items on the accounting profits Quality with An Empirical Study on Egyptian Corporation

This research aims to examine the effect of the company's management practicing earning management methods through intentional misclassify of revenue and expense items in the income statement(classification shifting) on the operating income Quality by applying to a sample of corporation companies registered on the Egyptian Stock Exchange during the period from 2012 to 2018, and to achieve study goal, The researcher depend on two models, one of which links the intentional misclassifying of expenses items in the income statement and its implication on the operating income quality. The researcher adopted the proposed model in a study (McVay, 2006), which is one of the most common models in accounting literature in the field of intentional misclassifying of expenses items in the income statement, and it is considered the first study that presented an applied evidence to reclassifying the of expenses items in the income statement in the context of American companies, and the second model link between the intentional misclassifying of revenue items in the income statement and its implications on the operational income quality, and the researcher adopted the proposed model in a study (Malikov, et al., 2018).
The importance of the study is that it provides an imperial evidence from the  Egyptian  business  environment,  as  the  researcher  relied  on  companies operating in the real estate sector, for sample of (19) companies, for the period   from 2012 to 2018 (133 observations), and the researcher concluded that there is evidence from the field of the environment Egyptian business on these companies' practices of earning management by managing the items of operating expenses and including them in non-operating expenses as well as managing the presentation of non-operating revenue items and their inclusion in operating revenues with the aim of inflating operating income, which adversely affected
 
the quality of operating income. The researcher believes that this study is one of the first studies at the level of the Arab world - within the limits of the researcher's knowledge - that dealt with the relationship between intentional misclassifying of income statement items and operating income quality.
The results of this study have implications for the professional bodies responsible for setting accounting standards as well as supervisory and oversight bodies for Egyptian companies, whereby artificially inflating operational income affects investment decisions and thus resource allocation decisions.