Global Journal of Management and Business Research, D: Accounting and Auditing, Volume 22 Issue 2

Research in Role of Creative Accounting Practices to Reduce Financial Risks in Jordanian Commercial Companies Abstract- This research aimed to identify the role of creative accounting practices in reducing financial risks in Jordanian Commercial companies from credit and market risks and operating risks. to achieve the objectives of the study, a questionnaire was distributed to the study community consisting of accountants, financial schools, risk management directors, and managers of the accounting department in Jordanian industrial companies in various governorates of the Kingdom by way of a simple random sample of (300) individuals from 30 Commercial companies, and we chose a simple random sample. Of them (100) individuals, after the distribution of the questionnaire, (72) questionnaires were retrieved, and (72%) of the questionnaires retrieved the study relied on (One T-Test) to test the study hypotheses and achieve its goals. The study concluded a set of results, the most important of which is the presence of a statistically significant role for creative accounting practices to reduce financial risks in Jordanian Commercial companies related to credit risks, market risks, and operational risks. Among the most prominent recommendations of this study is the necessity of conducting more studies on the relationship between creative accounting methods and practices and risk reduction. Keywords: creative accounting, corporate risk, credit risk, market risk, operational risk. I. I ntroduction ccounting has evolved through the time frame to the stage of creativity by processing financial statements with intellectual, creative procedures and methods to produce financial reports aimed at communicating economic information to beneficiaries to achieve their objectives. The sensitization side is behavioral and ethical based on the fact that specific interests of business owners do not prevail over those of other groups, the so-called neutrality of accounting policy But the existence of immoral creativity aims to mislead certain parties and show an unrealistic picture of the financial situation to achieve goals. Specific to both board members, owners, and stakeholders through the creation of accurate accounting methods and methods using specific accounting policies or gaps called creative accounting methods and practices, namely, the use of the variety of accounting alternatives that can be relied upon in the preparation of financial lists (d.Salami Aldenouri, 2018). Companies are considered to be in a volatile environment, which threatens their stability and makes them vulnerable to various financial risks that threaten the achievement of their goals. And may negatively affect the principle of accounting continuity over time and increased competition. The fluctuations and surprises have increased, allowing for the increase, multiplicity, diversity, persistence, and renewal of these threats; It is classified as credit risk arising from the lender's loss of funds due to the default of the counterparty and market risks related to volatility in asset price and liquidity, and operating risks resulting from financial losses from failures of internal operations, regulations or procedures. The many areas of creative accounting represented by the Accounting Information System, an accounting measurement, ways of distributing or charging various expenses, different methods of presenting financial and accounting lists and reports, techniques of financial analysis, and the development of accounting automated programs have contributed significantly to the reduction of the financial risk ratio in economic enterprises. Therefore, this study examined the role of using creative accounting to reduce companies. a) The problem of study and its elements Large enterprises and institutions seek to improve their financial position to reflect their financial and economic stability, which has an impact on their equity prices in the market. Therefore, these companies may use creative accounting in light of ways and methods to reduce multiple financial risks, and this is done in technical accounting ways. However, its harmful use leads to the manipulation of financial information and the exploitation of accounting bases, rules, and alternatives for decorating and improving contrary to reality and reality. This study, therefore, answered the following fundemental question: Is there a role for creative accounting practices in reducing the financial risks of Jordanian businesses? Based on the study's problem, the elements of the problem can be formulated as follows: 1. Is there a role of creative accounting practices in reducing credit risks in Jordanian businesses? A 81 Global Journal of Management and Business Research Volume XXII Issue II Version I Year 2022 ( )D © 2022 Global Journals Hamza Abdul Rahman Muhammad Al Wannan Author: Middle East University - Business College. e-mail: hamzah.wannan@gmail.com