Earnings Management Thresholds Motives The case of Tunisian listed Firms

Abstract:

The  purpose  of  this  study  is  double.  It  is  question,  first  of  all,  of  examining whether Tunisian  listed  firms manage their  results to avoid  losses and  earning decreases and investigate afterward the explanatory factors of such behaviour. The factors which we selected were  derived  from  the  positive  accounting  theory  applied  to  the  earnings management thresholds. Using the earnings distribution approach, similar to Burgstahler and Dichev (1997), we provide evidence  that  there  is a discontinuity  in the distribution of reported earnings and earnings changes of  Tunisian  firms surrounding  zero, signifying  that  firms  tend to engage  in earnings management to avoid reporting losses and earnings decreases. The research findings also reveal that growth opportunities have positive effect on earnings management thresholds, suggesting  that  Tunisian  firms  manage  earnings  around  thresholds  in  a  signalling  purpose rather than opportunistic one.