Creative Accounting among Corporations Listed in NSE: Sector Analysis

Abstract

The raison d'íªtre for this study was to analyse creative accounting vice among corporations listed in NSE in Kenya. Although creative accounting is an old practice, it still remains unresolved to date. The literature reviewed pointed to a possibility of creative accounting being practiced among major corporations in Kenya. The study population comprised 64 companies listed on NSE. A sample of 39 firms was selected for the survey and their financial statements for the year 2013 and 2014 analyzed. The data was analyzed on the basis of modified Jones model to estimate the discretionary accruals in various sectors. The results were explained on the basis of the sectors which were: Agricultural, Automobiles & Accessories, Banking, Commercial & Services, Construction & Allied, Energy and Petroleum, Insurance, Investment, Manufacturing & Allied, and Telecommunication & Technology. The study concluded that there were significant variances in discretionary accruals for various sectors as represented by firms listed in NSE in Kenya.