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Creative accounting: Some ethical issues of macro- and micro-manipulation

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Abstract

This paper examines two principal categories of manipulative behaviour. The term 'macro-manipulation' is used to describe the lobbying of regulators to persuade them to produce regulation that is more favourable to the interests of preparers. 'Micro-manipulation' describes the management of accounting figures to produce a biased view at the entity level. Both categories of manipulation can be viewed as attempts at creativity by financial statement preparers. The paper analyses two cases of manipulation which are considered in an ethical context. The paper concludes that the manipulations described in it can be regarded as morally reprehensible. They are not fair to users, they involve an unjust exercise of power, and they tend to weaken the authority of accounting regulators.

Suggested Citation

  • Catherine Gowthorpe & Oriol Amat, 2004. "Creative accounting: Some ethical issues of macro- and micro-manipulation," Economics Working Papers 748, Department of Economics and Business, Universitat Pompeu Fabra.
    • Handle: RePEc:upf:upfgen:748
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    Cited by:

    1. Ruslan Brukhanskyi, 2020. "Development Parameters of the Corporate Strategic Accounting and Analytical System of the Enterprise," Oblik i finansi, Institute of Accounting and Finance, issue 1, pages 13-19, March.
    2. Moldaschl, Manfred, 2009. "Betriebliche Wissensökonomie: Verfahren, Funktionen, Verirrungen," Papers and Preprints of the Department of Innovation Research and Sustainable Resource Management 1/2009, Chemnitz University of Technology, Faculty of Economics and Business Administration.
    3. Kevin Groves & Charles Vance & Yongsun Paik, 2008. "Linking Linear/Nonlinear Thinking Style Balance and Managerial Ethical Decision-Making," Journal of Business Ethics, Springer, vol. 80(2), pages 305-325, June.
    4. Pinghsun Huang & Timothy Louwers & Jacquelyn Moffitt & Yan Zhang, 2008. "Ethical Management, Corporate Governance, and Abnormal Accruals," Journal of Business Ethics, Springer, vol. 83(3), pages 469-487, December.
    5. David Hillier & Allan Hodgson & Peta Stevenson-Clarke & Suntharee Lhaopadchan, 2008. "Accounting Window Dressing and Template Regulation: A Case Study of the Australian Credit Union Industry," Journal of Business Ethics, Springer, vol. 83(3), pages 579-593, December.
    6. James S. Ang & Zhiqian Jiang & Chaopeng Wu, 2016. "Good Apples, Bad Apples: Sorting Among Chinese Companies Traded in the U.S," Journal of Business Ethics, Springer, vol. 134(4), pages 611-629, April.
    7. Begoña Giner & Francisca Pardo, 2015. "How Ethical are Managers’ Goodwill Impairment Decisions in Spanish-Listed Firms?," Journal of Business Ethics, Springer, vol. 132(1), pages 21-40, November.
    8. Salvador Carmona & Rafael Donoso & Philip Reckers, 2013. "Timing in Accountability and Trust Relationships," Journal of Business Ethics, Springer, vol. 112(3), pages 481-495, February.
    9. Hung-Wen Lin & Kun-Ben Lin & Jing-Bo Huang & Shu-Heng Chen, 2021. "Timely Loss Recognition Helps Nothing," Sustainability, MDPI, vol. 13(14), pages 1-24, July.
    10. Nirali Singh & Oriol Amat, 2020. "Detecting accounting fraud using quantitative techniques," Economics Working Papers 1738, Department of Economics and Business, Universitat Pompeu Fabra.
    11. Carmen Vâlcu & Roxana Aurelia Mârț & Cristina Moroi, 2019. "The Determining Factors of Creative Accounting," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 927-933, December.
    12. David Barker, 2008. "Ethics and Lobbying: The Case of Real Estate Brokerage," Journal of Business Ethics, Springer, vol. 80(1), pages 23-35, June.
    13. Dr. Mohammad Hossein & Vadiei Nowghabi & Saleh Anbarani, 2012. "Survey Effect Of Gender And Field Of Study On Students' Judegment Of The Morality Of Earnings Management," Far East Journal of Marketing and Management, Far East Research Centre, vol. 2(2), pages 12-26, April.

    More about this item

    Keywords

    Accounting ethics; accounting regulation; creative accounting; earnings management; financial reporting; macro-manipulation; micro-manipulation;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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