Accounting indicators published by firms remain a privileged source of information for the financial market. However, the margin of freedom granted by accounting rules allows managers to manipulate financial statements for discretionary ends, in order to mislead stakeholders on the firm's economic conditions. Our study aims at examining the Tunisian context and tries to determine the effect of earnings management on stocks liquidity. The relationship between liquidity and accruals was examined,

more »

... using the modified earnings management measurement model of Jones (1995). Our sample consists of 299 observations of Tunisian companies listed on the stock exchange during the 2000-2012period. Using a panel data qualitative approach, the obtained results point to a positive relationship between discretionary accruals and Tunisian firms' stocks (as estimated by the two measurement models). This indicates that discretionary accruals allow Tunisian investors to optimally construct their stocks portfolios. The results also highlighted a negative and a significant impact of transaction size and volume on firms'ask-bid spread.