THE EFFECT OF CREATIVE ACCOUNTING ON CORPORATE FAILURE

ABSTRACT

This study evaluated the effect of creative accounting on corporate failure in Nigeria in 20 selected companies quoted on the Nigerian Exchange Group from 2015 to 2022. The study was empirically carried out by extracting data from the annual reports for the period on which the descriptive statistics test, correlation analysis and the Ordinary Least Square regression analysis were used. Creative accounting was represented by four variables, namely: Discretionary Accrual Management (DCAM), Real Earnings Management (RAEM), Income Smoothing (ICSMT), Tax Avoidance (TAVD) and four research hypotheses were formulated from each of the variables. The result of the findings revealed that Discretionary Accrual Management (DCAM), Real Earnings Management (RAEM), Income Smoothing (ICSMT), Tax Avoidance (TAVD) all have negative and insignificant relationship with corporate failure. Based on this study, it was recommended that strict measures should be taken to punish offenders, management should desist from acts capable of reducing accounting independence and high ethical standard should be maintained in the accounting profession Also, it was concluded that further research can be carried out on this area by extending the study period and also by including more variables of significance to creative accounting.