ABSTRACT
This study is motivated by the existence of a deficiency in the financial reporting system in Nigeria, which is the act of creative accounting. The rate at which financial statements of various Nigerian companies are being manipulated is increasing and greatly affects the various stakeholders in one way or the other. This research work focuses on “the effect of creative accounting on shareholders wealth in business organizations”. The main objective of this study is to examine the effect of creative accounting on shareholders wealth. Four (4) research questions were raised for the study and three (3) hypotheses were formulated. The survey research design was adopted with a sample size of fifty (50). The questionnaires were instruments used for data collection. The data collected was subjected to simple validity and reliability test. The analysis of data was based on statistical frequency table and simple percentages, while correlation analysis was used to test hypothesis. Some of the findings are that creative accounting affects shareholders wealth and their investment decisions. Also, it has a great impact on the share prices of the business organizations. Based on these findings, it is recommended that only well and legally audited financial statements should be relied on by shareholders in making important decisions. Also, the financial Reporting Council of Nigeria (FRCN) should always ensure good corporate governance and due compliance with accounting standards, framework and other relevant legal statutes in Nigeria.
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