Title: The detection of real earnings management in MENA countries: the case of Tunisia

Authors: Sarra Elleuch Hamza; Sondos Bannouri

Addresses: ISCAE, LIGUE Laboratory, Campus University 2010, Manouba, Tunisia ' ISCAE, Campus University 2010, Manouba, Tunisia

Abstract: This paper examines the real earnings management activities of 76 Tunisian public offering firms before and after the implementation of the financial security law, over the ten-year period (2003 to 2012). We measure real earnings management through sales manipulation and sales investments and assets following Roychowdhury (2006) and Zang (2012). The results show that after the implementation of the Financial System Reform Actin 2005, Tunisian managers started using sales manipulation as tools of real earnings management. The sale of assets or investment has no effect on their behaviour. These results suggest that Tunisian firms tend to use real activities manipulation in a tightened regulatory environment.

Keywords: real earnings management; public offering companies; Financial System Reform Act; Tunisia; MENA countries; Middle East; North Africa; financial security law; sales manipulation; sale of investments; sale of assets; regulation.

DOI: 10.1504/AAJFA.2015.069889

Afro-Asian Journal of Finance and Accounting, 2015 Vol.5 No.2, pp.135 - 159

Received: 09 Jan 2014
Accepted: 08 Dec 2014
Published online: 15 Jun 2015 *

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