CREATIVE ACCOUNTING IN TIMES OF TURBULENCE: EMPIRICAL EVIDENCE IN GREEK SMES GOVERNANCE

Abstract

This paper’s objective is to critically assess issues related to creative accounting in times of turbulence, presenting the findings of an empirical study carried out in Greek small and medium-sized enterprises (SMEs). Greece was chosen because the financial crisis that the country has been facing since 2010 has created a highly prolonged uncertainty in its businesses and according to Goel (2017), this leads to an extension of the application of creative accounting. As this is Greece’s first empirical study published surveying professional corporate accountants and auditors, its findings are particularly noteworthy for regulation and corporate governance policy implications. As in Mindak et al. (2016), earnings manipulation is considered the most popular method of creative accounting in Greece after the Memorandums. The majority of this study’s findings are in line with those of Bhasin (2016) and Karim et al. (2016). Almost half of the respondents considered creative accounting to be legitimate, as Bhasin (2016), leading to the conclusion that strengthening the institutional/corporate governance framework is a key method of limiting the use of creative accounting.