IIARD International Institute of Academic Research and Development

Journal of Accounting and Financial Management (JAFM )

E-ISSN 2504-8856
P-ISSN 2695-2211
VOL. 8 NO. 7 2022
DOI: https://doi.org/10.56201/jafm.v8.no7.2022.pg252.270

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Creative Accounting Practices and Shareholders Wealth: Evidence from Deposit Money Banks in Nigeria

Isoso, Monday Chukwugeku Ph.D, Okee, Chiemam Faith Ph.D

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Abstract

The study investigated the relationship between creative accounting practices and shareholder’s wealth of deposit money banks (DMBs) in Nigeria within the period of 2008-2020. Its specific objectives were to investigate the relationship between the Income smoothing and return on equity, and Inventory manipulation and return on equity of DMBs in Nigeria. The cross- sectional survey research design was adopted for the study; the population of the study was all the 14 DMBs listed in Nigerian Exchange as at December 2021. Using purposive sampling technique, 5 deposit money banks were sampled and 74 respondents comprising accountants, auditors and compliance officers across the selected DMBs were used. 64 adequately completed and returned copies of questionnaire was used for the study analysis. Copies of questionnaire was used for data gathering. Univariate and Bivariate analysis was done. Regression analysis and model Statistics was used for data analysis and testing of hypothesis with the aid of SPSS. The result of the study shows that creative accounting dimensions of income smoothing and inventory manipulation have strong, positive and significant relationship with shareholder’s wealth measured in terms of return on equity (ROE). The study concluded that creative accounting affects shareholder’s wealth thus the need to checkmate the practice so that shareholders would actually know the true worth of their investment, not that which is coated that ends up giving them false hope in the long run. The study recommended that: Bank regulators should evaluate the adequacy of policies around inventory and assets valuation and at the same time, financial analysts and shareholders should note the application and consistency of accounting policies on inventory and assets. This way where inventory records have been manipulated can be discovered. There should be a review of the ownership structure of banks. There should be more dispersed ownership to include

keywords:

Creative Accounting, Deposit Money Banks, Income Smoothing, Inventory Manipulation, Nigeria, Return on Equity, Shareholders Wealth

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References:

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