Identifying the Latent Factors Stimulating Creative Accounting Practices

The study mainly identifies the latent factors stimulating creative accounting practices. Creative accounting practices can be stimulated by various factors such as individual satisfaction, job security, market and analyst expectations, adherence to norms, effective management of financial variables, and handling of issues such as acquisitions and mergers. Concealing fraud and asset misappropriation can also be among these factors. To prevent these practices, companies should establish reliable internal control systems, ethical guidelines, and transparent financial reporting. By doing so, they can safeguard their reputation and credibility in the financial industry. Four major components or latent factors have been identified: External Issues, Financial Settlements, New Issues Management, and Individual Motives.