Proposal on Accounting - Dissertation Example

The proposed research statement for this research is as follows: - “To explore and analyze the role of creative accounting in the recent banking crises and failures” Research Objectives The research would revolve around the following research objectives: - To explore various dimensions of creative accounting, earnings management and accounting scandals To analyze the links between creative accounting and the recent financial recession and banking crisis To propose precautionary measures which could draw a line between “good and moral creative accounting” and “bad and immoral creative accounting” Literature Review “Creative accounting is also known as aggressive accounting” (Torre, pp.

52-54, 2009), which refers to the practice of accounting that is in line with the letter of law but very much against the spirit of the law. In other words, it refers to the manipulation of the financial numbers related to the company in such a way to portray a favorable and positive picture of the company. Quite understandably, the same is done due to the pressures from the stakeholders’ pressure of the company, to achieve targets or to keep their own jobs (Torre, pp. 52-54, 2009). Without any doubts, the current financial recession and banking crisis is very much a product of creative accounting practices. . d play its part and the same is true for Lehman brothers and various others, which accounted bankruptcy, and the ones, which almost reached bankruptcy (Jones, Powers & Crosson, pp. 41, 2010).

Experts believe that it all started due to early signs of financial recession due to bursting of housing bubble and the impact of subprime mortgages (Jones, pp. 254-255, 2009). Banks which were forced to abide by the rules of mark to market accounting had to value their assets at the current market value which was decreasing steadily. With decreasing value of assets, the accountants had a problem at their hands, which was to improve the outlook of the company’s balance sheets so that investors could be wooed not to take away the investments (Jones, Powers & Crosson, pp. 41, 2010).

Once accountants knew that the picture was appearing favorable, banks and their managers started acting very irresponsibly by lending money to borrowers who they knew would never be able to pay back under normal circumstances. Fannie Mae and Freddie Mac played an important role in disturbing and distorting the financial markets and using the accounting as means to manipulate their financial positions. Quite understandably, this was not the solution of the problem and when the banks reached near the point of liquidation and bankruptcy, the investors and shareholders had no clue whatsoever about the happenings (Davies, pp.

37, 2010; Jones, pp. 254-255, 2009). Methodology In order to conduct this study, the researcher would ensure the use of both secondary and primary data. Secondary data would come under acquisition from different resources, such as books, journals, previous researches, data, statistics, and others. Questionnaires would be the major source of primary data and the target respondents of