Creative accounting and its influence on corporate performance and financial reporting: A case study of Kosovo

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As it is known, Kosovo is a newly established and developing country. Naturally, creative accounting practices in Kosovo are becoming more frequent due to gaps and weaknesses in management and audit quality. This study aims to examine the relationship between creative accounting and corporate performance and management, as well as the impact of managers’ ethics including audit period on financial reporting and creative accounting limitation. The study adopted a survey-based approach. The questionnaires were distributed among 159 managers, auditors, and head accountants. Linear regression was used to analyze the hypotheses. The research results confirmed the rejection of the first hypothesis, as the mean is less than 3 (the average on a five-point Likert scale). The results confirmed that creative accounting has a significant impact on corporate performance. The results also confirmed the second hypothesis as the mean is greater than 3.5 (the average on a five-point Likert scale). Thus, managers’ ethics have a significant effect on the reliability of financial statements. In addition, the research results confirmed the acceptance of the third hypothesis, as the mean is greater than 3 (the average on a five-point Likert scale), thus there is a positive influence of the audit period on creative accounting limitation. The study found a negative impact of creative accounting on corporate performance. Furthermore, a significant effect of managers’ ethics on financial statements’ reliability was concluded; and finally, the findings concluded that audit period and quality could significantly contribute to the creative accounting limitation.

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    • Figure 1. Demographic characteristics of respondents
    • Table 1. Descriptive statistics on the influence of creative accounting on corporate performance
    • Table 2. Descriptive statistics on the effects of managers’ ethics on financial statements’ reliability
    • Table 3. Descriptive statistics on the influence of audit period on creative accounting
    • Table 4. Linear regression analysis for H1
    • Table 5. Linear regression analysis for H2
    • Table 6. Linear regression analysis for H3
    • Investigation
      Enis Abdurrahmani
    • Methodology
      Enis Abdurrahmani, Zeki Doğan
    • Validation
      Enis Abdurrahmani
    • Writing – original draft
      Enis Abdurrahmani
    • Writing – review & editing
      Enis Abdurrahmani, Zeki Doğan
    • Conceptualization
      Enis Abdurrahmani, Zeki Doğan
    • Data curation
      Enis Abdurrahmani
    • Formal Analysis
      Enis Abdurrahmani
    • Funding acquisition
      Enis Abdurrahmani
    • Project administration
      Enis Abdurrahmani
    • Resources
      Enis Abdurrahmani, Zeki Doğan
    • Software
      Enis Abdurrahmani
    • Supervision
      Zeki Doğan
    • Visualization
      Zeki Doğan