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Manipulation of Financial Statements Through the Use of Creative Accounting. Case of Romanian Companies

Author

Listed:
  • Safta Ioana-Lavinia

    (Babeş-Bolyai University,Cluj-Napoca, Romania)

  • Achim Monica Violeta

    (Babeş-Bolyai University,Cluj-Napoca, Romania)

  • Borlea Sorin Nicolae

    (Vasile Goldis Western University of Arad, Romania University of Oradea, Romania)

Abstract

The manipulation of the information presented through financial statements could represent a significant red flag for suspected fraud. In our paper, we investigated the extent to which the Romanian companies resort to manipulation of information data presented through the reported annual financial statements. For this purpose, we used a group consisting of 62 non-financial companies listed on the Bucharest Stock Exchange for the analyzed period 2017-2018. The results of our study show that a majority percentage of the Romanian companies (approx. 84%) resort to manipulation of information provided through financial statements. Following the analysis carried out by activity fields, the results show that the companies activating in the fields of tourism, constructions, trade and transport resort to the manipulation of financial statements in the percent of 100%, followed by the companies activating in the field of production (86%) and services (50%). Our results are extremely useful to the users of financial information who must acknowledge the risks that they are exposed to in their decision-making process.

Suggested Citation

  • Safta Ioana-Lavinia & Achim Monica Violeta & Borlea Sorin Nicolae, 2020. "Manipulation of Financial Statements Through the Use of Creative Accounting. Case of Romanian Companies," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 30(3), pages 90-107, September.
    • Handle: RePEc:vrs:suvges:v:30:y:2020:i:3:p:90-107:n:5
    DOI: 10.2478/sues-2020-0019
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    References listed on IDEAS

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    1. Diana Balaciu & Victoria Bogdan & Alina Beattrice Vladu, 2009. "A Brief Review Of Creative Accounting Literature And Its Consequences In Practice," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(11), pages 1-16.
    2. Alina Beattrice Vladu & Oriol Amat & Dan Dacian Cuzdriorean, 2014. "Truthfulness in accounting: How to discriminate accounting manipulators from non-manipulators," Economics Working Papers 1434, Department of Economics and Business, Universitat Pompeu Fabra.
    3. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
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    Cited by:

    1. Eva Adámiková & Tatiana Čorejová, 2021. "Creative Accounting and the Possibility of Its Detection in the Evaluation of the Company by Expert," JRFM, MDPI, vol. 14(7), pages 1-12, July.

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    More about this item

    Keywords

    creative accounting; manipulation; non-manipulation; financial statements; users of accounting information;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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