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The Effect of Stock Market Listing on Real Earnings Management: Evidence From Algerian Companies

Bilal Kimouche

Abstract


This paper aims to explore the effect of the Algiers Stock Exchange listing on
real earnings management. The study included 14 non-financial non-listed
companies during the period 2015-2019 and six non-financial listed companies
during the period 2010-2019. Due to the small number of companies listed
on the Algiers Stock Exchange, the period of study was extended in the case
of listed companies to provide enough observations. The measurement of
real earnings management is based on the model of abnormal cash flows
from operations (Roychowdhury, 2006), while the hypothesis testing is
based on a model of multiple linear regression. The results indicate that the
company size and the nature of financial statement (consolidation) do not
have any effect on real earnings management in Algerian companies. The
results are not consistent with the author’s hypothesis about the positive
effect of stock market listing on real earnings management. The empirical
evidence suggests that the Algiers Stock Exchange listing has had a negative
effect on real earnings management in Algerian companies. This might be
due to the scrutiny of auditors and regulators as the number of companies is
easy to control, which decreases the opportunity for Algerian companies to
rely on real earnings management in accordance with the opportunistic or
informational view.

Keywords


real earnings management, stock market listing, company size, consolidation, Algerian companies

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