DefinePK

Abstract

In an era where financial integrity is under global scrutiny, the subtle yet pervasive phenomenon of creative accounting practices (CAP) continues to challenge the ethical foundations of corporate reporting. While regulatory mechanisms evolve to tighten controls, a deeper question remains unexplored: why do certain individuals, despite similar environments, choose to engage in such ethically ambiguous behavior? This study delves into the psychological fabric of CAP by examining the role of personality traits and risk-taking behavior in shaping the propensity of accounting professionals to manipulate financial data, particularly in the developing economy of Pakistan. Drawing on the Big Five personality framework and grounded in agency theory, the research investigates how traits such as extraversion and conscientiousness influence CAP both directly and indirectly through risk-taking propensities. Moreover, it explores how organizational ethical culture moderates this behavioral pathway. Utilizing a quantitative approach, data from 300 accounting professionals were analyzed using multiple regression and PROCESS macro models. Results reveal that extraversion and conscientiousness are positively associated with CAP, risk-taking serves as a significant mediator, and ethical culture negatively predicts CAP. However, the hypothesized moderation effect of ethical culture on the risk-taking–CAP relationship was not statistically significant, suggesting context-specific boundary conditions. This study not only contributes to behavioral accounting literature but also offers practical insights for governance, recruitment, and ethics training. It invites organizations to not only design systems that detect CAP but also understand the personalities behind the numbers.