Efficiency Enhancement to Prevent and Resolve Creative Accounting in Listed Companies on the Stock Exchange of Thailand

Abstract

Creative accounting is considered an economic crime that directly damages the national economy, which differs from other types of crimes. The objectives of this research were to study the situations and impacts of creative accounting, examine patterns and methods of creative accounting, investigate the relationship between corporate governance and common stock closing prices, and explore approaches to enhance efficiency in preventing and resolving creative accounting practices in listed companies on the Stock Exchange of Thailand. A mixed-methods research approach was employed in this study. The sample for the quantitative part consisted of 527 companies listed on the Stock Exchange of Thailand in 2024, using multiple regression analysis techniques. The qualitative part utilized in-depth interviews with 16 key informants. The research findings reveal that the size of the company board and the proportion of institutional shareholders have a positive relationship with common stock closing prices of listed companies. Moreover, the study found that the impacts of creative accounting arise from situational and structural pressures. Current patterns and methods of creative accounting often employ new methods by exploiting legal, regulatory, or policy loopholes. Good corporate governance can create value for company stock prices and help reduce creative accounting. The approach to enhancing efficiency in preventing and resolving creative accounting through the "M.A.K.E. U.P." Model consists of: Maximize Enforcement (M), Audit Independence Enhancement (A), Knowledge through Technology (K), Ethical Environment (E), Uplift Investor Awareness (U), and Preventive Culture (P).