Demystifying the Gimmicks of Financial Shenanigans: A Conceptual Study

Abstract

Financial reporting is the best and most vital way of communicating financial information of the business to all the stakeholders. It is also the most subtle way to commit financial fraud and scandals. Corporates are using financial statements and financial reporting not to educate the stakeholders about its performance but to deceive them by supplying misleading information. Corporate financial scandals have been around since the age of corporations and investors themselves. For a long time, dishonest management has been preying on unsuspecting investors by using financial shenanigans. While most companies report their results and figures honestly to investors, a significant number of companies use accounting or financial reporting tricks to hide the truth. Those tricks are known as financial shenanigans. These techniques are used by management to mislead investors about a company’s financial performance or economic health. Corporate financial shenanigans get away in the shadows of creative accounting. So, it is indispensable for all stakeholders particularly the common man to have some idea about the financial shenanigans. This research paper focuses on understanding the concept of financial shenanigans along with its types.