Paper #749

Title:

Creative accounting: Nature, incidence and ethical issues

Authors:

Oriol Amat and Catherine Gowthorpe

Date:

April 2004

Abstract:

This paper explores the nature and incidence of creative accounting practices within the context of ethical considerations.It explores several definitions of creative accounting and the potential and the range of reasons for a company's directors to engage in creative accounting. Later the paper considers the various ways in which creative accounting can be undertaken and summarizes some empirical research on the nature and incidence of creative accounting. The ethical dimension of creative accounting is discussed, drawing evidence from several empirical studies. The paper concludes with the analysis of possible solutions for the creative accounting problem.

Keywords:

Accounting ethics, creative accounting, earnings management, financial reporting

JEL codes:

M41

Area of Research:

Finance and Accounting

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