Creative accounting methods and corporate failure in Nigeria

Abstract

This study examined the relationship between Creative Accounting Methods and Corporate Failure in the Nigeria, specifically Aviation Industry. To carry out this study, Income smoothing, Accounting policy choice and Artificial transactions were used as proxies of creative accounting and Corporate failure as our endogenous variable, the motivation for this research was born out of observed incessant liquidation of air transport firms, some dead almost on arrival and public outcry against the poor management of the industry. the study design adopted was a blend of exploratory and explanatory survey. The study sourced its data from primary sources using structured questionnaire, and the data analysis was done using multiple regression analysis with the aid of SPSS version 25 to test the hypotheses formulated for this study. The results showed that creative accounting has a positive effect on corporate failure, specifically income smoothing and artificial transactions revealed the presence of creative accounting techniques in the industry. However, accounting policy choice showed a contrary result, though this did not invalidate the fact that there is the presence of creative accounting practices in the industry, given the cumulative coefficients of the proxies of independent variable. Based on the research findings, this study concluded that creative accounting techniques has significant effect on corporate failure. And recommended amongst others: the need to discourage the practices of creative accounting in the industry.

Keywords: Creative, Accounting, Methods, Corporate, Failure