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This is a Case Report study (also classified as: Literature Review).

August 21, 2025

Impact of Creative Accounting on Financial Performance

Key Points

Creative accounting often obscures the true financial condition of companies, diminishing trust in financial statements.
It can both negatively affect financial performance due to misleading practices and positively serve as a temporary rescue strategy during crises.
Observational analysis of case studies highlights diverse impacts, emphasizing the dual nature of creative accounting in various scenarios.
The findings suggest that understanding creative accounting is crucial for investors to make informed decisions and evaluate risks.

Abstract

Manipulations in the financial statements that are done with the help of loopholes in accounting standards, laws and regulations, called Creative Accounting.By Manipulating the financial Statements companies can conceal their actual financial position. This disables the transparency of financial reporting and presents a more favorable picture than what they truly exists.The objective of this research is to identify the Impact of Creative Accounting on financial performance,Investors and Stakeholders.Strong desire for money, power, competition, success and prestige produce Creative Accounting negatively. But in a positive way, sometimes Creative Accounting can be used as a weapon to save the company from Crisis. Similarly,If the company does not underestimate the economic impact of Creative Accounting and uses it like a short term medicine, then the negative impact on investors will be less.This article explains Creative Accounting through some case studies also.

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Impact of Creative Accounting on Financial Performance

Key Points

Abstract

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