The role of discretionary accruals and the relevance of accounting profit for algerian companies

Abstract

The goal ofthis study is to examine the extent ofearnings management activity and its effect on the consistency of financial reporting released by listed and unquoted Algerian firms in the Algiers Stock Exchange following the introduction of IFRS (International Financial Reporting Standards) in 2009 and to test the influence of positive accounting theory on earnings management practices. In order to determine the appropriate model, we gathered datafrom 42 companies in various sectors ofactivity for the period 20112015 and, with these data, we were able to retrieve 3 companies due to the issue of discontinuity of their results. This relation was measured and analyzed using the multiple regression test established in scientific literature used to assess the use of discretionary accruals. The findings of the study indicate that Algerian companies have practiced earnings management over various years of study and we ended up choosing a Jones model.