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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
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. 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.
    3. 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.
    4. 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.
    5. 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.

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