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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.

This sample comprises firms in the USA with data from 1989 to 2010. The authors used the methodology given in McVay (2006) and multiple regressions.

Managers of financially distressed firms are more likely to inflate core or operating income as compared to the healthy firms to meet or beat earnings benchmarks. They do so by misclassifying core or operating expenses as income-decreasing special items. Specifically, core expenses are shifted to income-decreasing special items like goodwill impairments, settlement costs, restructuring costs and write downs.

The paper sheds light on an important firm characteristic, financial distress that intensifies classification shifting – an earnings management tool which auditors, investors and regulators find tough to detect. The findings have implications for investors, as they fail to comprehend such shifting (McVay, 2006); analysts, who issue forecasts based on street earnings; lenders, as distressed firms may be concealing their true performance; and regulators, as the misclassification of income statement items is a violation of accounting principles.

The authors extend the literature on accruals and real earnings management by the financially troubled firms and present first evidence that the managers of such firms also manipulate core or operating income through classification shifting.

The purpose of this paper is to demonstrate the application of robust techniques to the estimation of hedonic house price indexes.

The authors use simulation analysis to compare an index estimated using ordinary least squares (OLS) with several indexes estimated using robust techniques. The analysis uses sales transactions data from a US city. The authors then explore how robust methods can correct for omitted variables under some circumstances and how they affect the revision problem that occurs when longitudinal hedonic indexes are updated.

Robust methods can resolve missing variable problems in some circumstances and also can substantially reduce the revision problem in longitudinal hedonic indexes.

Robust techniques may be preferable to OLS when constructing longitudinal hedonic indexes.

This is the first paper to undertake a systematic analysis of the applicability of robust techniques in constructing hedonic house price indexes.

This study tests the relationship between financial leverage and a firm's operational and financial short term responses to poor performance, based on Jensen's (1989) argument that higher predistress leverage increases a firm's incentive to respond more quickly to poor performance. This research is conducted on a sample of 45 poorly performing New Zealand firms between 1985 and 1994. The results indicate that higher leverage increases the probability of firms taking action in the short term. In particular, the evidence suggests that the probability of asset sales is positively associated with long‐term leverage, in addition to its relationship with the firm's stock return. Increased probability of management replacement is related to higher levels of short‐term leverage and surprisingly, the probability of dividend cuts decrease with higher levels of total and short‐term leverage. Poorly performing firms with higher leverage also appear to cut asset levels and dividends more aggressively than those with lower leverage levels.

This paper aims to empirically test the effect of list price and bidding strategies in ascending auctions of residential real estate.

Three regression models are estimated, using a unique data set from 629 condominium apartments in the inner-city of Stockholm, Sweden, sold between January 2010 and December 2011.

The results show that jump bidding has the predicted effect of reducing competition by scaring off bidders. However, a higher average bid increment leads to a higher selling price. Furthermore, results show that a fast auction in terms of average time between bids acts to increase the probability of so-called auction fever as both the number of bidders and the selling price are positively correlated with the speed of the auction. While the average behavior of all auction participants, in terms of jump bidding and time between bids, significantly affects auction outcomes, differences in strategies applied by winners and losers show mixed results. The results of this study with respect to sellers’ list price strategy show that underpricing is an ineffective strategy in terms of enticing more bidders to participate in the auction. Furthermore, underpricing is not sufficient to have a positive effect on the selling price.

This paper is one of the first papers to empirically analyze how different bidding strategies affect the outcome of residential real estate auctions in terms of competition and the final selling price.

This paper aims to identify conceptual changes in the practical application of asset impairment testing methods as required under IAS (International Accounting Standards) 36.

The paper explores general principles for an impairment testing framework, to address impairment issues that arise in valuation practice.

This paper shows that the way value in use is required to be assessed is technically flawed, prone to application error, and creates conceptual and financial mismatches with the requirements of other accounting standards.

From a practical perspective, the consequential scope for valuation errors is further exacerbated by the reluctance of company directors to accept the need for impairment and, in some cases, by gaming.

This paper provides a practitioner's viewpoint to impairment testing under the IAS, and identifies several inconsistencies with the application of the standard.

Restructuring strategies are complicated processes and choices are influenced by and interact with the agreements and conflicts of interest among stakeholders. Firms in the emerging economies are characterized by high growth, high leverage, less effective corporate governance and different legal and institution context as compared to the firms in the developed economies. The purpose of this paper is to explain the agency monitoring variables that influence decisions to select and/or avoid restructuring strategies of the firms that have experienced a performance decline in an emerging economy. The authors have chosen Thailand as an example of an emerging economy as it was believed as the center of the major Asian economic crisis in mid-1997.

The sample of the study comprises 120 Thai non-financial firms listed on the Stock Exchange of Thailand, all of which experienced a performance decline for two consecutive years during 1997-2008; the years 1997 and 1998 coinciding with financial crisis. The study uses panel logistic regressions to examine the likelihood of the choices of restructuring strategies given the agency variables after controlling for other possible influences.

The results show that restructuring strategy choices are significantly influenced by both agency factors and control variables. The results show both similarities to and differences from earlier studies of the developed economies. The similarities are found in leverage agency behaviors. The differences in the results are found in the types and the details of the agency factors, in particular the management ownership and governance factors. The authors also explore the effects of the agency variables interactions on the choices of restructuring strategies of the performance-declining firms.

Emerging economies have many similarities, but they also demonstrate some country specific differences. This study is confined to one single country, and thus, may not be comparable with other emerging economies due to differences in factors such as regulatory, institutional, tax environments etc. However, it does show a way to conduct such studies in the context of other countries.

To the knowledge, this is the first comprehensive study of corporate restructuring in an emerging economy, particularly of the South-East Asian economy. The authors also show, for the first time, the agency variables interactions effects on the restructuring strategies of the firms. Thus, the study contributes to the growing literature of the corporate restructuring in terms of the contextual knowledge of the emerging economies.

Most studies of entrepreneurial failure do not have good measures of consumers' perceptions of product quality. As a result, perceived quality in entrepreneurial success is often omitted. The craft brewery industry is comprised of small entrepreneurial firms selling an experience good making it an ideal study setting. Using online beer reviews, the authors examine how perceptions of beer quality and the size of brewery production influence entrepreneurial success of microbreweries and brewpubs.

Using data from the Brewers Association and over 12 million reviews from beeradvocate.com between 2002 and 2016, the authors examine the relationship between perceived product quality to firm survival. Perceived quality is measured using online beer reviews. The authors expect larger microbreweries will survive longer as will breweries with higher perceived quality. The authors use a conditional log-log hazard model to estimate survival for microbreweries and brewpubs.

A one standard deviation increase in the beer ratings reduces the probability of exit by 26% for a microbrewery and 19% for brewpubs. The authors find that larger microbreweries have a lower hazard of exiting.

Entrepreneurs in the brewing industry start as home brewers before beginning commercial enterprises. Scaling up production is difficult. The initial size of their brewery is an important determinant of their success. Likewise, the perception of the quality of their beer as measured by consumer ratings gives a good market indication about future survival. This research is one of the few studies to examine the influence of perceived quality on firm survival in a growing industry.

The purpose of this paper is to examine the pricing of vacant lots in master planned golf course communities (GCCs) over the period of 2000-2016. The authors compare the longitudinal pricing behavior of different lot types during this economic cycle and examine the causes of the property bubble and subsequent deterioration of the business model with the arrival of the Financial Economic Crisis (FEC).

The authors construct spatial hedonic models for three master planned GCCs in Pickens County, South Carolina and use interaction dummies to examine the pricing of different types of vacant lots before and after the FEC.

The authors find that there is a collapse in value for interior lots in the GCCs compared to interior lots in the county. As interior lots comprise over 50 percent of inventory in a typical master planned GCC, this loss of real estate value threatens the viability of such communities in the aftermath of the FEC.

The research results inform real estate investors, real estate developers, current homebuyers and potential homebuyers of the impacts of the FEC on master planned GCCs and some of the risks associated with such developments.

This is the first paper the authors are aware of that indicates the financial viability of master planned GCCs is associated with the pricing fragility of interior lots during cyclical markets. While demand for premium quality lots suffers, there is a collapse in demand for interior lots during the crisis.

The purpose of this paper is to investigate the applicability of developed country turnaround predication models as well as an “in country” developed turnaround prediction model for a sample of financially distressed Malaysian companies over the period of 2000‐2007.

Multiple Discriminant Analysis (MDA) technique was used to determine companies' financial health.

It was found that severity of financial distress, profitability, liquidity and size are significant predictor variables in determining turnaround potential of distressed companies in Malaysia. The findings show that developed country turnaround predication models have relatively better prediction accuracies compared to turnaround model based on Malaysian firm‐level data. These models' prediction accuracies were gauged by comparing their predicated successful/failed turnaround companies (Type I and II errors) with actual classification of successful/failed turnaround companies by the Bursa Malaysia, and it was found that developed country models were better than model developed using Malaysian data in identifying correctly some of the actual successful turnaround companies.

The paper's comparisons show that Bursa's methodology is appropriate in classifying and monitoring the distressed companies.

This is believed to be the first paper to examine turnaround of the companies in Malaysian context.

The purpose of this paper is to examine two contrasting financially distressed companies in China and their restructuring strategies. Chinese firms are selected as providing a context where bankruptcy law is in its infancy and where the state is still heavily involved as a shareholder. As a result, the process of distressed company restructuring is likely to differ markedly from that observed in developed economies.

The paper adopts a case study methodology to explore on an in‐depth basis the features of the distress resolution process in the Chinese institutional context and to investigate how it differs from the process in more developed economies. The paper analyses the firms' accounting‐based performance to understand the nature of their difficulties. It then examines the complex restructuring procedures initiated and uses an event study approach to evaluate the stock market's reaction to these strategies.

The distinguishing features of the Chinese restructuring process are as follows. First, the assets of distressed firms are sometimes transferred without payment being made in return. Second, social considerations play a role, in particular the state's need to maintain employment levels or ensure the funding of redundancy payments. Finally, firms can remain in severe financial distress for extended periods of time; possible reasons for this are explored in the paper.

The existing distress literature focuses on developed economies such as the USA and the UK. The paper provides an in‐depth understanding of the special features of the Chinese situation, including the role of government and other more commercially driven shareholders; the subsequent importance of social policy issues; the protracted and complex nature of the restructurings; and the frequent use of mergers, share transfers, asset swaps and asset sales.