QUALITATIVE STUDY REGARDING THE RELATIONSHIP BETWEEN CORPORATE GOVERNANCE AND CREATIVE ACCOUNTING

Berinde Sorin (), Rachisan Paula Ramona () and Adrian Grosanu ()
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Berinde Sorin: Universitatea Babes Bolyai, Facultatea de Business
Rachisan Paula Ramona: Universitatea Babes Bolyai, Facultatea de Business

Annals of Faculty of Economics, 2012, vol. 1, issue 2, 642-647

Abstract: The concept of corporate governance has come into the spotlight after the big accounting scandals. Corporate governance represents the manner in which a company is managed and controlled, and this aspect is closely related to the creative accounting practice; ownership structure, the board of directors'(tm) structure, the frequency of these bodies'(tm) meetings, they all can encourage but also discourage accounting manipulation. We tend to agree with the authors who claim that certain changes within the company '" including the structure of certain departments '" and a rigorous control can significantly reduce the use of creative accounting techniques. Concerning the main objective, respectively outlining a clear image of corporate governance starting from creative accounting, in order to achieve it we conducted a qualitative study, we decided to analyze one of the main research directions, namely corporate governance, as we considered it a current issue with great impact on creative accounting.Our study is based on corporate governance seen as a possible solution to reduce creative accounting practices We used as research method the content analysis which developed in three stages, namely: pre-analysis, content exploitation, respectively processing and interpretation of results. Moreover, when conducting this qualitative study, we use both quantitative and qualitative analysis, using external observation (non-participant) method in collecting the necessary data. We also used the comparative method by studying the main lines of research in different periods (1990-2010). These studies refer to creative accounting techniques, to conflicts of interest between managers, directors and shareholders, to joint ownership and control rights, to the lack of transparency regarding financial reporting and auditors'(tm) independence '" as evaluators of the financial and accounting information. Not all research directions have been sufficiently explored; therefore, in the future the researches must be continued and deepened. We consider that a number of independent outside directors within the board could contribute to a better monitoring of the management team, leading to a lower possibility for the company to use creative accounting practices compared to the situation in which the board would be formed mainly from inside director.

Keywords: corporate governance; creative accounting; qualitative study; empirical study; theoretical study (search for similar items in EconPapers)
JEL-codes: G34 M40 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (3)

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