Impact of Accounting Conservatism on Income Smoothing: Empirical Evidence from Algeria
This paper investigates the impact of accounting conservatism on income smoothing as a proxy for accounting manipulation. The study used 993 observations for 133 Algerian companies from 2012 to 2020, where income smoothing was measured by the variations in cash flows relative to earnings. However, c...
| Main Authors: | , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Sciendo
2024-03-01
|
| Series: | Studia Universitatis Vasile Goldis Arad, Seria Stiinte Economice |
| Subjects: | |
| Online Access: | https://doi.org/10.2478/sues-2024-0002 |
| _version_ | 1797340408541347840 |
|---|---|
| author | Kimouche Bilal Charchafa Ilyes |
| author_facet | Kimouche Bilal Charchafa Ilyes |
| author_sort | Kimouche Bilal |
| collection | DOAJ |
| description | This paper investigates the impact of accounting conservatism on income smoothing as a proxy for accounting manipulation. The study used 993 observations for 133 Algerian companies from 2012 to 2020, where income smoothing was measured by the variations in cash flows relative to earnings. However, conservatism was measured through non-operating accounting accruals, accruals-to-earnings ratio before extraordinary items, and allowances. The results showed that total accruals do not impact income smoothing versus positive impacts from non-operating accruals and allowances to income smoothing. Therefore, the study concluded that accounting conservatism facilitates income smoothing in Algerian companies by extending the discretionary room available for managers to manipulate earnings. These results require accounting regulators to consider the role of conservatism in manipulation when setting or amending accounting standards. They also imply that auditors should give more attention to conservative accounting practices to limit the opportunistic behavior of managers and increase the reliability of financial information. |
| first_indexed | 2024-03-08T10:02:36Z |
| format | Article |
| id | doaj.art-497b367942b444fd8e26e35ac7a7db77 |
| institution | Directory Open Access Journal |
| issn | 2285-3065 |
| language | English |
| last_indexed | 2024-03-08T10:02:36Z |
| publishDate | 2024-03-01 |
| publisher | Sciendo |
| record_format | Article |
| series | Studia Universitatis Vasile Goldis Arad, Seria Stiinte Economice |
| spelling | doaj.art-497b367942b444fd8e26e35ac7a7db772024-01-29T08:54:12ZengSciendoStudia Universitatis Vasile Goldis Arad, Seria Stiinte Economice2285-30652024-03-01341375510.2478/sues-2024-0002Impact of Accounting Conservatism on Income Smoothing: Empirical Evidence from AlgeriaKimouche Bilal0Charchafa Ilyes11University of 20 Août 1955-Skikda, Faculty of Economics, Commerce and Management Sciences, Finance and Accounting Department, Algeria2University of Setif 1, Faculty of Economics, Commerce and Management Sciences, Finance and Accounting Department, AlgeriaThis paper investigates the impact of accounting conservatism on income smoothing as a proxy for accounting manipulation. The study used 993 observations for 133 Algerian companies from 2012 to 2020, where income smoothing was measured by the variations in cash flows relative to earnings. However, conservatism was measured through non-operating accounting accruals, accruals-to-earnings ratio before extraordinary items, and allowances. The results showed that total accruals do not impact income smoothing versus positive impacts from non-operating accruals and allowances to income smoothing. Therefore, the study concluded that accounting conservatism facilitates income smoothing in Algerian companies by extending the discretionary room available for managers to manipulate earnings. These results require accounting regulators to consider the role of conservatism in manipulation when setting or amending accounting standards. They also imply that auditors should give more attention to conservative accounting practices to limit the opportunistic behavior of managers and increase the reliability of financial information.https://doi.org/10.2478/sues-2024-0002accounting conservatismincome smoothingaccounting accrualscash flow from operationsallowancesm40m41 |
| spellingShingle | Kimouche Bilal Charchafa Ilyes Impact of Accounting Conservatism on Income Smoothing: Empirical Evidence from Algeria Studia Universitatis Vasile Goldis Arad, Seria Stiinte Economice accounting conservatism income smoothing accounting accruals cash flow from operations allowances m40 m41 |
| title | Impact of Accounting Conservatism on Income Smoothing: Empirical Evidence from Algeria |
| title_full | Impact of Accounting Conservatism on Income Smoothing: Empirical Evidence from Algeria |
| title_fullStr | Impact of Accounting Conservatism on Income Smoothing: Empirical Evidence from Algeria |
| title_full_unstemmed | Impact of Accounting Conservatism on Income Smoothing: Empirical Evidence from Algeria |
| title_short | Impact of Accounting Conservatism on Income Smoothing: Empirical Evidence from Algeria |
| title_sort | impact of accounting conservatism on income smoothing empirical evidence from algeria |
| topic | accounting conservatism income smoothing accounting accruals cash flow from operations allowances m40 m41 |
| url | https://doi.org/10.2478/sues-2024-0002 |
| work_keys_str_mv | AT kimouchebilal impactofaccountingconservatismonincomesmoothingempiricalevidencefromalgeria AT charchafailyes impactofaccountingconservatismonincomesmoothingempiricalevidencefromalgeria |