The Ethics of Creative Accounting: Some Spanish Evidence

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The Ethics of Creative Accounting: Some Spanish Evidence

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Oriol Amat ()
John Blake
Ester Oliveras ()

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Abstract

'Creative accounting' involves accountants in making accounting policy choices or manipulating transactions in such a way as to give the impression in the accounts that they prefer. While regarded as unethical by most observers, a defence of creative accounting can be based on the ability of the users of accounts to identify bias in accounting policy choices and make appropriate adjustments. In this paper we take the example of the Barcelona Football Club where the club management made three key accounting policy choices that presented a favourable position, and a supporters' club presented an alternative report choosing three alternative accounting policies that presented an unfavourable position. We presented each of these financial reports to one of two groups of Spanish bank loan offices, with supporting notes making the impact of the accounting policy choices clear. We found that the more favourable set of accounts was significantly more likely to attract a positive response to a loan request. This result undermines the defence for creative accounting, based on the ability of users to identify manipulation.

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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 455.

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Date of creation: Mar 2000
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Handle: RePEc:upf:upfgen:455

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Find related papers by JEL classification:
M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting

This paper has been announced in the following NEP Reports:

NEP-ALL-2000-05-16 (All new papers)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Oriol Amat & John Blake & Jack Dowds, 1998. "The Ethics of Creative Accounting," Economics Working Papers 349, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
Merchant, Kenneth A. & Rockness, Joanne, 1994. "The ethics of managing earnings: An empirical investigation," Journal of Accounting and Public Policy, Elsevier, vol. 13(1), pages 79-94. [Downloadable!] (restricted)

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Ester Oliveras & Oriol Amat, 2003. "Ethics and Creative Accounting: Some Empirical Evidence on Accounting for Intangibles in Spain," Economics Working Papers 732, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]

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This page was last updated on 2009-11-13.

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