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Creative Accounting and Impact on Management Decision Making

Author

Listed:
  • Sunday O. Effiok

    (, Nigeria)

  • Okon E. Eton

    (, Nigeria)

Abstract

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.

Suggested Citation

  • Sunday O. Effiok & Okon E. Eton, 2012. "Creative Accounting and Impact on Management Decision Making," International Journal of Business Research and Management (IJBRM), Computer Science Journals (CSC Journals), vol. 3(1), pages 35-47, February.
    • Handle: RePEc:aml:intbrm:v:3:y:2012:i:1:p:35-47
    as

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    References listed on IDEAS

    as
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    2. Ruland, Robert G., 1984. "Duty, obligation, and responsibility in accounting policy making," Journal of Accounting and Public Policy, Elsevier, vol. 3(3), pages 223-237.
    3. Merchant, Kenneth A. & Rockness, Joanne, 1994. "The ethics of managing earnings: An empirical investigation," Journal of Accounting and Public Policy, Elsevier, vol. 13(1), pages 79-94.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Pharmaceutical; Package; Form; Color; Perception; Doctor;
    All these keywords.

    JEL classification:

    • M0 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - General

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