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Creative accounting practices and shareholders' wealth

Author

Listed:
  • Kayode Oluwadamilare Bankole
  • I O Ukolobi

    (Delta State Polytechnic, Ogwashi-Uku, Delta State, Nigeria.)

  • Onyuka Mcdubus

    (Novena University)

Abstract

This study was designed to establish the effect of creative accounting on shareholders' wealth. Inventory valuation, depreciation policy and debtors ageing schedule were used as proxies for creative accounting. The study reviewed the theories and techniques of creative accounting as well as the determinants of shareholders wealth. Empirical studies on creative accounting were reviewed. So were the scandals caused globally by creative accounting? The study found that frequent changes in inventory valuation and in depreciation policy affect shareholders wealth. It found that frequent manipulation of ageing schedule for the purpose of determining bad and doubtful debts provision had no significant effects on shareholders wealth. The study recommends stricter monitoring of entities to ensure full disclosures of changes in accounting policies with a view to guarding against immoral behaviors.

Suggested Citation

  • Kayode Oluwadamilare Bankole & I O Ukolobi & Onyuka Mcdubus, 2018. "Creative accounting practices and shareholders' wealth," Post-Print hal-05102829, HAL.
    • Handle: RePEc:hal:journl:hal-05102829
    Note: View the original document on HAL open archive server: https://hal.science/hal-05102829v1
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    References listed on IDEAS

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    4. Dumitru Matis & Alina Beattrice Vladu & Laura Negrea, 2009. "Cash-Flow Reporting Between Potential Creative Accounting Techniques And Hedging Opportunities Case Study Romania," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(11), pages 1-13.
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