Identifying and Explaining the Factors Influencing Creative Accounting: A Grounded Theory Approach

Abstract

This study aimed to identify and explain the technical and environmental factors influencing creative accounting practices in Iranian companies and to develop a conceptual model based on the grounded theory approach. This applied, qualitative, and exploratory research collected data through semi-structured interviews with 15 accounting and auditing experts selected via purposive and snowball sampling. Data were analyzed through open, axial, and selective coding using MAXQDA software, and the trustworthiness of findings was ensured through Guba and Lincoln’s criteria and participant feedback validation. Analysis resulted in 289 initial concepts categorized into five main themes: causal factors (e.g., short-term performance pressure, ambiguity of standards), contextual factors (e.g., profit-oriented organizational culture, weak professional ethics), intervening conditions (e.g., weakened auditor independence, corporate governance quality), strategies (accrual-based and real earnings management, disclosure techniques), and consequences (decreased transparency, weakened investor trust, financial crises). The core category identified was “interaction between technical and environmental indicators in shaping creative accounting.” The findings revealed that creative accounting is not solely the outcome of technical deficiencies in accounting standards but emerges from the complex interaction of technical and environmental factors. The proposed conceptual model offers a practical framework for managers, auditors, and regulatory bodies to identify vulnerabilities, strengthen internal controls, enhance transparency, and prevent the emergence of creative accounting.