CORPORATE FAILURE IN NIGERIA: A RESULTANT EFFECT OF CREATIVE ACCOUNTING
Authors:
Olayinka, Segun Wale & Adekola, Omotayo Ajibike
Abstract:
This study examined the practice of creative accounting as it affects corporate entities in Nigeria. This is with the view to providing empirical evidence on whether or not creative accounting contributes to corporate failure in Nigeria. The primary source of data collection was employed in this study through a well-structured questionnaire administered to randomly select practising auditors in Nigeria and accounting instructors in tertiary institutions. Analysis of Variance (ANOVA) and chart analysis was used to analyse the data. The results showed that off-balance sheet financial transaction coupled with profit smoothening is the most used creative accounting techniques and that the desire to understate profits to reduce tax liability is the major reason for engaging in creative accounting in Nigeria. Also, it was observed that creative accounting has a significant impact on corporate failure in Nigeria. Based on the above findings, the study concludes that creative accounting is unethical and offers a formidable challenge to both the quality of financial reporting and the going concern status of corporate entities in Nigeria.