The Impact of Creative Accounting and Fraudulent Financial Reporting on Investors Behaviour in the Nigeria Security Market: An Overview
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Recent reports of high-profile company failures have cast the
spotli ght on creativ E' accounting and ren ewed the call for published financial
statements that show a full and accurate picture of a company's performance
And position. Ira company fails to provide meaningful disclosure to investors
about where it has been, where it is and where it is going, the value of the
company may be eroded, and shareholders will lose confidence in the
company Af1er the collapse of Enron in 200 I. creative accounting and
fraudulent financial reporting have become issues of concern in the nation's
llnancial environment. It is clear that the age-old profession of accounting
owns its share of creative thinkers. It is also clear that no profession or
occupation should be excluded tl·om creativity. Today's news is rift with case
after case of mis-reporting of finrlllcial results. Many were a direct result of
lim111cial managers taking advantage of "loop holes" in today's accounting
standards. There are significant cases of accounting irregularities that resulted
in landmark changes in accounting standards. There are weaknesses in
today's accounting standards and this makes it easy to manipLilate figures.
Every set of financial statements presents its own unique set of "Red-Flags"
in accounting crimes. There is a need to knov.' how to review financial
reports. identify signals of creative accounting and to equip investors and
depositors so as not to loose their investment.
Keywords
HF5601 Accounting, HJ Public Finance