Do Tunisian firms manage earnings to attain thresholds?
The purpose of this study is to examine the extent to which Tunisian listed firms manage their results to avoid losses and earning decreases, and to investigate the determinants of such behaviour. The factors which we selected were derived from the positive accounting theory applied to the earnings management thresholds. Based on a panel data of 375 firm-year observations during the period 2002-2014, we provide evidence that firms tend to engage in earnings management to avoid reporting losses and earnings decreases. Considering earnings management incentives, the results 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. We also found that firm size and taxes have negative effect, which confirm the political costs hypothesis that larger firms tend to report earnings lower than last year in order to pay lower taxes.