Home   >   CSC-OpenAccess Library   >    Manuscript Information
Full Text Available

This is an Open Access publication published under CSC-OpenAccess Policy.
Creative Accounting and Impact on Management Decision Making
Sunday O. Effiok, Okon E. Eton
Pages - 35 - 47     |    Revised - 15-01-2012     |    Published - 21-02-2012
Volume - 3   Issue - 1    |    Publication Date - February 2012  Table of Contents
Pharmaceutical, Package, Form, Color, Perception, Doctor
The study was conducted to appraise the impact of creative accounting on management decisions of selected companies listed in the Nigerian Stock Exchange. With the background, the main objective of the study includes the examination of the extent to which macro-manipulation of financial statement affects management decisions; to examine the extent to which macro-manipulation of financial statement affects share price performance; and to determine the impact of misreported assets and liabilities as well as making recommendations to help remedy some of the problems. The research method used was descriptive and the primary data collected were summarized and tabulated. These were picked in line with the hypothesis variables of the study so as to determine their validity. It was observed that the application of creativity in financial statement reporting significantly affects the decision of management to recapitalize the firm upward or dispose of it reserves. The study concluded that creative accounting through macro-manipulation of financial statements affects a firm’s price and capital market performance. In view of the study, the researcher recommended that the application of creative accounting on management decision should be to avoid misreporting of assets and liabilities in their financial report, and that management decision towards creative accounting should be geared towards the relative advantage principle and good corporate governance which encourage challenges to current ways of thinking and not manipulating for self interest.
CITED BY (0)  
1 Google Scholar
2 CiteSeerX
3 refSeek
4 Scribd
5 SlideShare
6 PdfSR
1 Beatty, M. G. and Henrion, M. (1995). Uncertainty: A Guide to Dealing with Uncertainty in Quantitative Risk and Policy Analysis. Cambridge University Press, Cambridge.
2 David, S. (1993), “The Dangers of Creative Accounting”, Worth (March): 92-98.Reprinted in Alien Ormiston (ed.) (1998), Accounting 98/99 (Guilford, Connecticut,USA: Dushkin/McGraw-Hill): 94-96.
3 Edward, E. and Bell, P. (1991). The theory and measurement of business income,Berkeley, University of California Press.
4 Healy, P. M. (2004). The effect of bonus schemes on accounting decisions, working paper, Massachusetts institute of technology.
5 Mathews, M. R. and Perera, M. H. B. (1996). Accounting theory and development,Boston: An International Thompson Publishing Company.
6 Merchant, K.A. and Rocknes, J. (1994). The ethics of managing earnings: an empirical investigation, Journal of accounting and public policy, 13: 79- 94.
7 Metcalf, L. (1977), The Accounting Establishment, Staff study as the Chairman of the state US Senate Subcommittee (Washington, D. C.: The United States Government Printing Office).
8 Meckling, W. H., Jensen, M. C., 1976. Theory of the Firm: Managerial Behavior,Agency Costs and Ownership Structure in Michael, C. Jensen (Eds.) A Theory of the Firm: Governance, Residual Claims and Organizational Forms, Harvard University Press.
9 Niskanem, L., and L. keloharju. ‘Abusive earnings Management early warning signs’.The CPA Journal (Aug.) 2000.
10 Pfeffer, A.M. & Salancik, A. H. (1978). Truth or consequences: A study of critical issues and decision making in accounting. Journal of Business Ethics, 16:161-171.
11 Revsine, L. (1991) ‘The selective financial misrepresentation hypothesis’, Accounting horizons, December: 16-27.
12 Ruland, R. G. (1984) ‘Duty, obligation and responsibility in accounting policy making’,Journal of Accounting and Public Policy, Fall: 223-37.
13 Schipper, K., 1989. A commentary on earnings management. Accounting Horizons 3(4), pp. 91-102.
14 Schipper, K. & Vincent, L. 2003. Earnings Quality. Accounting Horizons, Supplement;97-110.
15 Schlachter, P. J. 1990. Organizational influences on individual ethical behaviour in public accounting. Journal of Business Ethics, 9:839-853.
16 Smith Terry, 1992. Accounting for Growth: Stripping the Camouflage from Company Accounts. Century Business publications, London.
17 Stolowy H., Breton G. (2003) “Accountants Manipulation: A literature Review and Proposed conceptual Framework”, available on-line at: http://www.emeraldinsight.com
18 Trueman, M., 1993. Comptabilite britanique, mod d’emploi, Economia, paris.
19 Velayutham, S. 2003. The accounting profession’s code of ethics. Critical perspectives on Accounting, 14:483-503.
20 Wahlen, N. The problem of earnings management’ Insights, the corporate and Securities Law Advisor (Jun.) 1999.
21 Wahlen, H. (1999), Accrual Accounting and Budgeting – Key Issues and recent Developments (OECD), Paris).
Mr. Sunday O. Effiok
- Nigeria
Mr. Okon E. Eton
- Nigeria