Creative Accounting Practices and Investment: Implications for the Shareholders in Nigerian Public Companies

Abstract

This study examines the relationship between creative accounting and
investment decisions by shareholders in Nigerian public companies. The
contemporary viewpoint of financial consultants, firm of auditors and
academicians about the relationship was the aim. The survey research
design is adopted where 61 professionals comprising chartered
accountants, company secretaries, financial consultants/analysts, and
seasoned academicians in the accounting profession. Five hypotheses at
5% significance level are tested, while Correlation and Pearson productmoment correlation is used to measure the degree of association between the variables. The findings reveal that creative accounting has significant relationship with investment decision of the investors. It is concluded that most investments in quoted companies are made as a result of the creative accounting practices inherent in financial reports. It is
recommended that the Financial Reporting Council of Nigeria and every
stakeholder should act to ensure that corporate governance practice is
actually achieved for a sound financial reporting practice.