Creative Accounting: A Threat to Corporate Survival of Firms in Nigeria

Abstract

This study examined creative accounting as it affects survival of corporate firms in Nigeria. To effectively carry out this study income smoothing, window dressing and choice of accounting policies were used as proxies of creative accounting (independence variable) and corporate survival as dependent variable. The researcher was motivated to study this title due to incessant stagnation, liquidation and collapse of public business organizations in Nigeria suspected to be caused by poor management of resources. The study adopted a descriptive survey and data were gathered primarily using a well-structured questionnaire. Data analysis was done using arithmetic mean while hypothesis were tested using chi-square(x2) analytical tool. It was discovered that income smoothing, window dressing as well as changes in accounting policy. Significantly and negatively affected corporate survival of business firms in Nigeria. This implies that instead of perpetual existence or survival of such companies, they dwindle, stagnate, liquidate and finally collapse. It therefore recommends that accounting and government regulatory bodies should step up proper monitoring tools to effectively monitor the activities of the preparers of financial accounts and management to rise to the expectations of investors and other user of accounting report.