IMPACT OF CREATIVE ACCOUNTING ON THE FINANCIAL PERFORMANCE OF NIGERIA DEPOSIT MONEY BANKS

Creative accounting practices have been identified to include practices such as recognizing premature or fictitious revenue, aggressive capitalization and extended amortization policies, misreported assets and liabilities, getting creative with income statement and problems with cash flow reporting (Aondoaka & Ekpe, 2018). Furthermore, managers play this game for rewards as favourable effect on share prices, lower corporate borrowing costs due to an improved credit rating, incentive compensation plans for officers and key employees and or political gains. With this practices and motives, the question then is asked: Can a firm increase its market value by creative accounting? Do shareholders and investors take the accounting figures at face value? Or are the firm's shares traded in efficient, well functional markets in which investors can see through such financial illusion? With this practice, users of accounting information are being misled and this constitutes a threat to corporate investment and growth (Akenbor & Ibanichuka, 2012; Aondoaka & Ekpe, 2018). Financial reporting is very crucial for the effective functioning of corporate governance systems. Current accounting practices allow a degree of choice of policies and professional judgment in determining the method of measurement, criteria for recognition and even the definition of the accounting entity. The exercise of this choice could involve a deliberate non- disclosure of information and manipulation of accounting figures, thereby making the business appear more profitable than it really is. While the financial number games may have different levels, participation in it has a singular objective which is creating an altered impression of a firm’s business performance (Niskanem and Kebharju, 2020). With this practice, users of financial statements are many times misled and this constitutes a threat to corporate investment and growth. In line with this, (David, 2023) observed that with an all- too frequent occurrence, users of financial statements are shaken with the disclosures by the corporate management that certain accounting irregularities have been discovered and as a result, current and prior year financial results require some kind of review. This accounting practice is termed Creative Accounting.