The impact of financial performance and firm characteristics on earnings management: Case of Tunisian Companies
The purpose of this study is to test the effect of financial performance on earnings management, with the presence of a firm’s specific characteristics, in a non-credible financial information context such as Tunisia. A panel data approach, namely multiple regression analysis, was applied on a sampl...
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| Format: | Article |
| Language: | English |
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LLC "CPC "Business Perspectives"
2022-11-01
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| Series: | Investment Management & Financial Innovations |
| Subjects: | |
| Online Access: | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/17322/IMFI_2022_04_Theiri.pdf |
| _version_ | 1797947554796666880 |
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| author | Saliha Theiri Naziha Kasraoui Nesrine Bouzaiene |
| author_facet | Saliha Theiri Naziha Kasraoui Nesrine Bouzaiene |
| author_sort | Saliha Theiri |
| collection | DOAJ |
| description | The purpose of this study is to test the effect of financial performance on earnings management, with the presence of a firm’s specific characteristics, in a non-credible financial information context such as Tunisia. A panel data approach, namely multiple regression analysis, was applied on a sample of 30 firms operating in different sectors and observed over the period 2012–2021. Two estimation methods, the fixed effects and random effects models, are used. To choose the best estimation method, the Breusch-Pagan and Hausman tests were used.The results indicate, on the one hand, the financial performance measured by Tobin’s Q and Marris’ ratio, positively affects earnings management. On the other hand, the variables of firm characteristics, such as financial leverage, asset structure, growth rate and sectoral affiliation, decrease earnings manipulation, and firm size and managers’ ownership have no effect on earnings management. This means that managers of Tunisian firms manipulate their results to improve the level of performance and their financial sate. This manipulation is driven by goals other than those observed in other contexts and related to the financial market. This finding contributes to the literature on the association between several features of earnings management and firm performance, with the effect of firm characteristics. |
| first_indexed | 2024-04-10T21:29:47Z |
| format | Article |
| id | doaj.art-a43e734285c2475c81d8dc041821c889 |
| institution | Directory Open Access Journal |
| issn | 1810-4967 1812-9358 |
| language | English |
| last_indexed | 2024-04-10T21:29:47Z |
| publishDate | 2022-11-01 |
| publisher | LLC "CPC "Business Perspectives" |
| record_format | Article |
| series | Investment Management & Financial Innovations |
| spelling | doaj.art-a43e734285c2475c81d8dc041821c8892023-01-19T14:24:01ZengLLC "CPC "Business Perspectives"Investment Management & Financial Innovations1810-49671812-93582022-11-0119418319210.21511/imfi.19(4).2022.1517322The impact of financial performance and firm characteristics on earnings management: Case of Tunisian CompaniesSaliha Theiri0https://orcid.org/0000-0003-3166-3301Naziha Kasraoui1Nesrine Bouzaiene2https://orcid.org/0000-0002-7275-3568Assistant Professor, Faculty of Economic Sciences and Management of Tunisia, Finance & Accounting Department, University El ManarAssistant Professor, Faculty of Economic Sciences and Management of Tunisia, Finance & Accounting Department, University El ManarPh.D., Faculty of Economic Sciences and Management of Tunisia, Finance & Accounting Department, University El ManarThe purpose of this study is to test the effect of financial performance on earnings management, with the presence of a firm’s specific characteristics, in a non-credible financial information context such as Tunisia. A panel data approach, namely multiple regression analysis, was applied on a sample of 30 firms operating in different sectors and observed over the period 2012–2021. Two estimation methods, the fixed effects and random effects models, are used. To choose the best estimation method, the Breusch-Pagan and Hausman tests were used.The results indicate, on the one hand, the financial performance measured by Tobin’s Q and Marris’ ratio, positively affects earnings management. On the other hand, the variables of firm characteristics, such as financial leverage, asset structure, growth rate and sectoral affiliation, decrease earnings manipulation, and firm size and managers’ ownership have no effect on earnings management. This means that managers of Tunisian firms manipulate their results to improve the level of performance and their financial sate. This manipulation is driven by goals other than those observed in other contexts and related to the financial market. This finding contributes to the literature on the association between several features of earnings management and firm performance, with the effect of firm characteristics.https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/17322/IMFI_2022_04_Theiri.pdfdiscretionary accrualsearnings managementfinancial performancepanel approachTunisia |
| spellingShingle | Saliha Theiri Naziha Kasraoui Nesrine Bouzaiene The impact of financial performance and firm characteristics on earnings management: Case of Tunisian Companies Investment Management & Financial Innovations discretionary accruals earnings management financial performance panel approach Tunisia |
| title | The impact of financial performance and firm characteristics on earnings management: Case of Tunisian Companies |
| title_full | The impact of financial performance and firm characteristics on earnings management: Case of Tunisian Companies |
| title_fullStr | The impact of financial performance and firm characteristics on earnings management: Case of Tunisian Companies |
| title_full_unstemmed | The impact of financial performance and firm characteristics on earnings management: Case of Tunisian Companies |
| title_short | The impact of financial performance and firm characteristics on earnings management: Case of Tunisian Companies |
| title_sort | impact of financial performance and firm characteristics on earnings management case of tunisian companies |
| topic | discretionary accruals earnings management financial performance panel approach Tunisia |
| url | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/17322/IMFI_2022_04_Theiri.pdf |
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