The Role of Earnings Management in Creative Accounting: A Study of Motivations, Techniques, and Consequences

This study investigates the role of earnings management in creative accounting, focusing on the motivations, techniques, and consequences among selected Nigerian listed firms. Using secondary data from audited financial statements between 2018 and 2022, the study applies the Modified Jones Model and multiple regression analysis to examine how financial and governance factors influence earnings manipulation. The findings reveal that earnings management is commonly driven by performance pressures and incentive structures, and is often facilitated by weak governance frameworks. Board size, audit committee independence, and return on assets were negatively associated with earnings manipulation, while earnings per share had a positive correlation. Firm size showed no significant effect. The study concludes that effective governance can mitigate the opportunistic use of creative accounting, and recommends enhanced regulatory oversight, ethical training, and stronger board practices as key measures to curb the practice. The research provides theoretical and policy insights relevant to emerging economies like Nigeria.