Impact of Creative Accounting on Financial Performance

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.