THE IMPACT OF CREATIVE ACCOUNTING ON FIRM PERFORMANCE OF OIL AND GAS COMPANIES IN NIGERIA

ABSTRACT

Creative accounting is an escalating source of worry, posing a risk to the integrity of both accounting and auditing functions. Although the problem of creative accounting isn't a recent one, these practices appear to have backfired, leading to substantial investment losses for shareholders and other investors. In certain instances, dividends have even been distributed from capital due to the deception linked to such reports. Against the discussion above, the study seeks to examine the impact of creative accounting practices on the firm performance of listed oil and gas companies in Nigeria. The study adopted ex-post fact research design. The fixed and random effect panel regression technique was used to analyse the data from a sample of Nigeria listed oil and gas companies over a period of five years (2017-2021). The study used varieties of financial indicators, such as return on asset (ROA) and dividend per share (DPS) as measures of firm performance. The result revealed that creative accounting is negative and it is non- statistically significant with return on assets (ROA), this means that if the company engages in creative accounting practices, such as inflating revenue, it may lead to a reduction in ROA.The result further revealed a positive but not significant relationship between creative accounting and dividend per share (DPS). This means that the coefficient for (DA) is positive but not statistically significant, indicating that larger companies tend to have higher dividend per share.The study recommends that companies maintain financial transparency, and prioritize adherence to accounting standards and ethical financial reporting practices all this will discourage creative accounting practices.