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Ethics and creative accounting: Some empirical evidence on accounting for intangibles in Spain



Recent research shows that financial reports are losing relevance. Mainly this is due to the growing strategic importance of intangible assets in the performance of a company. A possible solution is to modify accounting standards so that statements include more self-generated intangible assets, taking into account with their inherent risk and difficulty of valuation. We surveyed loan officers who were asked to assess the credit-worthiness of a hypothetical company. The only information given was a simplified version of financial statements. Half the group got statements where research and development costs had been capitalized. The other half got statements in which these costs had been treated as an expense. The findings show that capitalization was significantly more likely to attract a positive response to a loan request. The paper raises the question of whether accounting for intangibles might provide managers with one more creative accounting technique and, in consequence, its ethical implications.

Suggested Citation

  • 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.
  • Handle: RePEc:upf:upfgen:732

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    References listed on IDEAS

    1. Baruch Lev & Theodore Sougiannis, 1999. "Penetrating the Book-to-Market Black Box: The R&D Effect," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 26(3-4), pages 419-449.
    2. Oriol Amat & John Blake & Jack Dowds, 1998. "The ethics of creative accounting," Economics Working Papers 349, Department of Economics and Business, Universitat Pompeu Fabra.
    3. Oriol Amat & John Blake & Ester Oliveras, 2000. "The ethics of creative accounting: Some Spanish evidence," Economics Working Papers 455, Department of Economics and Business, Universitat Pompeu Fabra.
    4. repec:bla:joares:v:37:y:1999:i:2:p:353-385 is not listed on IDEAS
    5. 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.
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    More about this item


    Intellectual capital; ethics; creative accounting;

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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