Corporate Governance For Sustainable Development And The Challenge Of Creative Accounting

The governance of publicly traded firms is of great importance today with increasing levels of investment in these companies, as improper or inadequate governance ultimately affects the sustainable development performance of such firms. Due to the prevalence of creative accounting, investors and other stakeholders are deceived by the financial statements prepared using creative accounting techniques which make them suffer untoward consequences. This study examines the effect of corporate governance on creative accounting in the manufacturing sector in Nigeria. Data for research is collected from the primary source of questionnaire survey conducted on managers and accountants in the manufacturing sector. Data analysis is done using one sample t-test with the aid of Statistical Packages for Social Science (SPSS). Corporate mechanism variables studied include: the board composition, audit structure and ownership structure. The result shows that a significant relationship exists between the corporate governance mechanisms and creative accounting and that enforcing corporate governance code will reduce significantly unethical accounting practices, thereby improving quality of accounting information. The paper concludes that the complex and diverse nature of business transactions and the latitude available in the accounting standards and policies make it difficult to handle the issue of creative accounting. It recommends a stricter compliance to the existing codes of corporate governance in companies especially with regards to board compositions and audit structures for the accomplishment of sustainable development.