CREATIVE ACCOUNTING ON CORPORATE FAILURE IN NIGERIA

ABSTRACT

This study aims to investigate the impact of creative accounting on corporate failure in Nigeria, with a focus on discretionary accrual management, real earnings management, income smoothing, and tax avoidance. The research covers all 153 companies listed on the Nigerian Exchange Group (NGX) as of 2023, from which a sample of 20 companies was selected using a convenience random sampling method. A correlation research design is employed to explore the relationships between the variables over an eight-year period (2016-2023), utilizing secondary data obtained from annual reports. The primary method for data analysis is Panel Data Analysis, complemented by descriptive statistics and correlation matrices. The findings indicate that there is a negative and insignificant relationship between discretionary accrual management, real earnings management, income smoothing, tax avoidance, and corporate failure in Nigeria. This suggests that the creative accounting practices examined do not have a significant impact on corporate failure among the sampled companies during the study period. The study recommends that management of publicly listed companies should avoid manipulating earnings to present positive outcomes. Creative accounting should be considered a serious offense, and stricter measures and punishments should be enforced by accounting bodies and regulatory authorities. Nigerian accountants should maintain high ethical standards and integrity to ensure that the accounting profession is respected both nationally and internationally.