IDEAS home Printed from https://ideas.repec.org/a/gam/jrisks/v10y2022i4p76-d786181.html
   My bibliography  Save this article

Creative Accounting Determinants and Financial Reporting Quality: Systematic Literature Review

Author

Listed:
  • Ibtihal A. Abed

    (Azman Hashim International Business School, Universiti Teknologi Malaysia, Kuala Lumpur 54100, Malaysia)

  • Nazimah Hussin

    (Azman Hashim International Business School, Universiti Teknologi Malaysia, Kuala Lumpur 54100, Malaysia)

  • Mostafa A. Ali

    (Azman Hashim International Business School, Universiti Teknologi Malaysia, Kuala Lumpur 54100, Malaysia)

  • Hossam Haddad

    (Business Faculty, Middle East University, Amman 11831, Jordan)

  • Maha Shehadeh

    (Business Faculty, Middle East University, Amman 11831, Jordan)

  • Elina F. Hasan

    (Business Faculty, Middle East University, Amman 11831, Jordan)

Abstract

Creative accounting is considered to be a 21st-century phenomenon that has received increased attention after the worldwide economic crisis and budget deficits, particularly the prevention and detection of accounting manipulation. Creative accounting is a practice that influences financial indicators by using accounting knowledge and rules that do not explicitly violate accounting policies, rules, and laws. The main purpose for implementing creative accounting is to show the financial position desired by the company management; stakeholders are informed of what the management wants them to perceive. Creative accounting can be used to manipulate financial information from its correct and accurate form by exploiting existing rules or, in many cases, ignoring one or more rules. Therefore, the methodology of the present work contributes to the existing literature by systematically reviewing the impacts of creative accounting determinants on financial reporting quality, especially in the banking sector. In this review, we describe and critically analyze previous relevant works to identify and assess the relationship between the constructs addressed in the study. In conclusion, this study offers insight for academia, researchers, and practitioners on determining creative accounting practices and their influences on fraudulent financial reporting between 2015 and 2020. Lastly, the present study contributes to the existing information by conducting new research on creative accounting determinants to enhance the quality of financial reporting and, therefore, help professionals to improve practices within the profession.

Suggested Citation

  • Ibtihal A. Abed & Nazimah Hussin & Mostafa A. Ali & Hossam Haddad & Maha Shehadeh & Elina F. Hasan, 2022. "Creative Accounting Determinants and Financial Reporting Quality: Systematic Literature Review," Risks, MDPI, vol. 10(4), pages 1-25, April.
    • Handle: RePEc:gam:jrisks:v:10:y:2022:i:4:p:76-:d:786181
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-9091/10/4/76/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-9091/10/4/76/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ibtihal A. Abed & Nazimah Hussin & Hossam Haddad & Nidal Mahmoud Al-Ramahi & Mostafa A. Ali, 2022. "The Moderating Effects of Corporate Social Responsibility on the Relationship between Creative Accounting Determinants and Financial Reporting Quality," Sustainability, MDPI, vol. 14(3), pages 1-23, January.
    2. Shouyu Yao & Zhuoqun Wang & Mengyue Sun & Jing Liao & Feiyang Cheng, 2020. "Top executives’ early‐life experience and financial disclosure quality: impact from the Great Chinese Famine," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(5), pages 4757-4793, December.
    3. Cecilia Lelly Kewo & Cecilia Lelly Kewo, 2017. "The Influence of Internal Control Implementation and Managerial Performance on Financial Accountability Local Government in Indonesia," International Journal of Economics and Financial Issues, Econjournals, vol. 7(1), pages 293-297.
    4. Jagan Krishnan & Jayanthi Krishnan & Sophie Liang, 2020. "Internal control and financial reporting quality of small firms," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 19(2), pages 221-246, April.
    5. Eiler, Lisa A. & Miranda-Lopez, Jose & Tama-Sweet, Isho, 2015. "The Impact of Accounting Disclosures and the Regulatory Environment on the Information Content of Earnings Announcements," The International Journal of Accounting, Elsevier, vol. 50(2), pages 142-169.
    6. Ibrahim Elsiddig Ahmed, 2020. "The Qualitative Characteristics of Accounting Information, Earnings Quality, and Islamic Banking Performance: Evidence from the Gulf Banking Sector," IJFS, MDPI, vol. 8(2), pages 1-16, May.
    7. Fizza Tassadaq & Qaisar Ali Malik, 2015. "Creative Accounting and Financial Reporting: Model Development and Empirical Testing," International Journal of Economics and Financial Issues, Econjournals, vol. 5(2), pages 544-551.
    8. Miroslav Škoda & Tomáš Lengyelfalusy & Gabriela Gabrhelová, 2017. "Creative Accounting Practicies In Slovakia After Passing Financial Crisis," Copernican Journal of Finance & Accounting, Uniwersytet Mikolaja Kopernika, vol. 6(2), pages 71-86.
    9. Rajagopal, 2014. "Organizations and Innovation," Palgrave Macmillan Books, in: Architecting Enterprise, chapter 3, pages 58-86, Palgrave Macmillan.
    10. Essien Ekerette Akpanuko & Ntiedo John Umoren, 2018. "The influence of creative accounting on the credibility of accounting reports," Journal of Financial Reporting and Accounting, Emerald Group Publishing Limited, vol. 16(2), pages 292-310, June.
    11. Doan, Anh-Tuan & Lin, Kun-Li & Doong, Shuh-Chyi, 2020. "State-controlled banks and income smoothing. Do politics matter?," The North American Journal of Economics and Finance, Elsevier, vol. 51(C).
    12. George Iatridis & Panayotis Alexakis, 2012. "Evidence of voluntary accounting disclosures in the Athens Stock Market," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 11(1), pages 73-92, February.
    13. Mostafa A. Ali & Nazimah Hussin & Hossam Haddad & Reem Al-Araj & Ibtihal A. Abed, 2021. "Intellectual Capital and Innovation Performance: Systematic Literature Review," Risks, MDPI, vol. 9(9), pages 1-19, September.
    14. Balaciu Diana Elisabeta & Vladu Alina Beattrice, 2010. "Creative Accounting - Players And Their Gains And Loses," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(2), pages 813-819, December.
    15. Neal Arthur & Huifa Chen & Qingliang Tang, 2019. "Corporate ownership concentration and financial reporting quality," Journal of Financial Reporting and Accounting, Emerald Group Publishing Limited, vol. 17(1), pages 104-132, March.
    16. Ikhlas Hentati-Klila & Saida Dammak-Barkallah & Habib Affes, 2017. "Do auditors’ perceptions actually help fight against fraudulent practices? Evidence from Tunisia," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 21(3), pages 715-735, September.
    17. Md. Mamunur Rashid, 2020. "Financial reporting quality and share price movement-evidence from listed companies in Bangladesh," Journal of Financial Reporting and Accounting, Emerald Group Publishing Limited, vol. 18(3), pages 425-458, May.
    18. Maurizio Massaro & John Dumay & James Guthrie, 2016. "On the shoulders of giants: undertaking a structured literature review in accounting," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 29(5), pages 767-801, June.
    19. Diana Elisabeta Balaciu & Victoria Bogdan & Liliana Feleaga & Adela-Laura Popa, 2014. "“Colorful” Approach Regarding Creative Accounting. An Introspective Study Based On the Association Technique," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 13(4), pages 643-664, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mo’taz Kamel Al Zobi & Baker Akram Falah Jarah, 2023. "The Role of Internal Auditing in Improving the Accounting Information System in Jordanian Banks by Using Organizational Commitment as a Mediator," Risks, MDPI, vol. 11(9), pages 1-14, August.
    2. Roman Blazek & Pavol Durana & Jakub Michulek, 2023. "Renaissance of Creative Accounting Due to the Pandemic: New Patterns Explored by Correspondence Analysis," Stats, MDPI, vol. 6(1), pages 1-20, March.
    3. Venkata Mrudula Bhimavarapu & Shailesh Rastogi & Jagjeevan Kanoujiya & Aashi Rawal, 2023. "Repercussion of financial distress and corporate disclosure on the valuation of non-financial firms in India," Future Business Journal, Springer, vol. 9(1), pages 1-19, December.
    4. Amer Morshed & Abdulhadi Ramadan, 2023. "Qualitative Analysis of IAS 2 Capability for Handling the Financial Information Generated by Cost Techniques," IJFS, MDPI, vol. 11(2), pages 1-12, May.
    5. Maria Kovacova & Lenka Hrosova & Pavol Durana & Jakub Horak, 2022. "Earnings management model for Visegrad Group as an immanent part of creative accounting," Oeconomia Copernicana, Institute of Economic Research, vol. 13(4), pages 1143-1176, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Maria Kovacova & Lenka Hrosova & Pavol Durana & Jakub Horak, 2022. "Earnings management model for Visegrad Group as an immanent part of creative accounting," Oeconomia Copernicana, Institute of Economic Research, vol. 13(4), pages 1143-1176, December.
    2. Ibtihal A. Abed & Nazimah Hussin & Hossam Haddad & Nidal Mahmoud Al-Ramahi & Mostafa A. Ali, 2022. "The Moderating Impact of the Audit Committee on Creative Accounting Determination and Financial Reporting Quality in Iraqi Commercial Banks," Risks, MDPI, vol. 10(4), pages 1-22, April.
    3. Yao, Shouyu & Pan, Yuying & Sensoy, Ahmet & Uddin, Gazi Salah & Cheng, Feiyang, 2021. "Green credit policy and firm performance: What we learn from China," Energy Economics, Elsevier, vol. 101(C).
    4. Mariana Peprníčková & Lucie Jandová, 2017. "The Level of Creative Accounting in the Practice of Czech Accounting Entities [Míra kreativního účetnictví v praxi českých účetních jednotek]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2017(4), pages 57-86.
    5. Susi Susilawati & Titik Aryati & Vinola Herawaty, 2024. "Financial Reporting Quality, ESG and Prosperity Disclosure, and Investment Efficiency: The Role of Information Asymmetry (Moral Hazard Friction)," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 7, pages 142-160.
    6. Roman Blazek & Pavol Durana & Katarina Valaskova, 2020. "Creative Accounting as an Apparatus for Reporting Profits in Agribusiness," JRFM, MDPI, vol. 13(11), pages 1-19, October.
    7. Murineanu Alina Maria, 2024. "Creative Accounting: A Literature Review," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 18(1), pages 2112-2121.
    8. Meinel, Martin & Eismann, Tobias T. & Baccarella, Christian V. & Fixson, Sebastian K. & Voigt, Kai-Ingo, 2020. "Does applying design thinking result in better new product concepts than a traditional innovation approach? An experimental comparison study," European Management Journal, Elsevier, vol. 38(4), pages 661-671.
    9. Alba Manresa & Andrea Bikfalvi & Alexandra Simon, 2018. "The Use And Determinants Of Training And Development For Creativity And Innovation," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 22(07), pages 1-28, October.
    10. Wang Kai, 2019. "Towards a Taxonomy of Idea Generation Techniques," Foundations of Management, Sciendo, vol. 11(1), pages 65-80, January.
    11. Lirios Alos-Simo & Antonio J. Verdu-Jover & Jose M. Gomez-Gras, 2020. "Knowledge Transfer in Sustainable Contexts: A Comparative Analysis of Periods of Financial Recession and Expansion," Sustainability, MDPI, vol. 12(12), pages 1-24, June.
    12. Vitaliy Roud & Thomas Wolfgang Thurner, 2018. "The Influence of State‐Ownership on Eco‐Innovations in Russian Manufacturing Firms," Journal of Industrial Ecology, Yale University, vol. 22(5), pages 1213-1227, October.
    13. Valeriy Makarov & Albert Bakhtizin, 2014. "The Estimation Of The Regions’ Efficiency Of The Russian Federation Including The Intellectual Capital, The Characteristics Of Readiness For Innovation, Level Of Well-Being, And Quality Of Life," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(4), pages 9-30.
    14. Tobias Knabke & Sebastian Olbrich, 2018. "Building novel capabilities to enable business intelligence agility: results from a quantitative study," Information Systems and e-Business Management, Springer, vol. 16(3), pages 493-546, August.
    15. Adamou, Pr. Rabani & Ibrahim, Boubacar & Bonkaney, Abdou Latif & Seyni, Abdoul Aziz & Idrissa, Mamoudou, 2021. "Niger - Land, climate, energy, agriculture and development: A study in the Sudano-Sahel Initiative for Regional Development, Jobs, and Food Security," Working Papers 308806, University of Bonn, Center for Development Research (ZEF).
    16. Fang, Feifan & Zhao, Yinyu & Xi, Zemiao & Han, Xinru & Zhu, Yuchun, 2023. "The impact of famine experience on middle-aged and elderly individuals’ food consumption: Evidence from China," The Journal of the Economics of Ageing, Elsevier, vol. 26(C).
    17. Said, Jamaliah & Alam, Md. Mahmudul & Abdullah, Nik Herda Nik & Zulkarnain, Nur Nadiah & Anugerah, Rita, 2019. "Innovation Risk and Sustainable Competitive Advantages: Empirical Assessment of Government-Linked Companies in Malaysia," SocArXiv u7yth, Center for Open Science.
    18. Anja Heinicke, 2018. "Performance measurement systems in small and medium-sized enterprises and family firms: a systematic literature review," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 28(4), pages 457-502, February.
    19. LametK.Maika & Kevin Wachira, 2020. "Effects of organizational culture on strategy implementation in water boards in Kenya," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 9(4), pages 15-28, July.
    20. Rosa Lombardi & Raffaele Trequattrini & Federico Schimperna & Myriam Cano-Rubio, 2021. "The Impact of Smart Technologies on theManagement and Strategic Control: A Structured Literature Review," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2021(suppl. 1), pages 11-30.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jrisks:v:10:y:2022:i:4:p:76-:d:786181. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.