Practices influencing creative accounting among corporations listed in Nairobi Securities Exchange

Abstract

Creative accounting is a vice that has led to collapse of several companies both in internationally and here in Kenya. The raison d'être for this study was to assess the practices influencing creative accounting among listed on the Nairobi Securities Exchange (NSE) in Kenya. The study was based on the existing theories, more so on the positive accounting theories, which were used to identify these practices. Systematic sampling method was applied in selecting the sample for the study. The research design used in this study was a cross sectional survey design which assessed data for the year 2014. Data was acquired through administering questionnaires and interviews to a sample of managers, accountants and internal auditors of companies publicly listed on the NSE. A sample of thirty nine out of a target population of sixty four Companies publicly listed was extracted from the Nairobi Securities Exchange website. Analysis of variance (ANOVA) was used to establish if there is a statistical significance between the observed and expected values. Regression analysis together with the Pearson coefficient of correlation, were used to test hypothesis. The results indicated the level significant influence on creative accounting among the companies listed on the NSE for practices such as Managements compensation, contractual obligation, tax management, share price performance and insider dealings.