ABSTRACT

This study was carried out to investigate the effect of creative accounting on shareholders’ wealth. In order to actualize the objectives of the study, various literature and theoretical issues were discussed. The instrument used for the purpose of this research was the primary research instrument (questionnaire). The mass of information generated from the questionnaires was summarized in form of table and analyzed using frequency, simple percentage and mean. The researcher administered two hundred (200) questionnaires to respondents, out of which a total of one hundred and seventy eight (178) were retrieved for the purpose of presenting and analyzing responses to issues raised in the questionnaires. The hypotheses were tested using the linear regression analysis statistical tool.

The findings from the analysis revealed among other things that; income smoothing has a positive (direct) and insignificant relationship with shareholders wealth; tax avoidance has a positive (direct) and significant relationship with shareholders wealth; and accelerated depreciation has a negative (inverse) and significant relationship with shareholders wealth.

The study recommends amongst others that; it is important for local investors to embrace the shareholder value concept as a great way to create value; and the accounting profession's watchdogs in the country should be strict when it comes to issues of creative accounting.