Authors: Sarra Elleuch
Addresses: ISCAE, LIGUE Laboratory, Manouba University, Campus University, Manouba, 2010, Tunisia
Abstract: This paper aims to provide evidence of the use of the asset sales tool by Tunisian managers as a way of real earnings management during the critical period following the 2011 uprising. For this purpose, we have expanded the models developed by Roychowdhury (2006) and Gunny (2010) by adding the cash-holdings ratio as an explanatory variable. Our findings reveal that following the 2011 uprising, Tunisian firms are more oriented to use the investment sales tool to increase both earnings and cash at the same time. This study is the first that analyses the impact of the Tunisian revolution on earnings management through asset sales. The findings of our study help investors to identify new earnings management tools that were used less frequently before the economic crisis. These findings have implications for regulators who need to understand the earnings management behaviour of managers before developing monitoring and supporting mechanisms during the economic crisis.
Keywords: Tunisian 2011 uprising; big bath hypothesis; smoothing hypothesis; real earnings management; fixed asset sales; investment asset sales.
International Journal of Accounting, Auditing and Performance Evaluation, 2021 Vol.17 No.1/2, pp.1 - 35
Accepted: 02 Apr 2020
Published online: 14 Sep 2021 *