This study investigates the effect of creative accounting practices on shareholder value in listed Deposit Money Banks (DMBs) in Nigeria, focusing specifically on income smoothing and inventory manipulation. Creative accounting involves the deliberate manipulation of financial information within the bounds of accounting standards to present a distorted view of a firm’s financial health. While some argue that these practices may enhance short-term investor confidence, others warn of their long-term detrimental effects on transparency and shareholder wealth. Using Return on Investment (ROI) as a proxy for shareholder value, the study applies an ex-post facto research design and regression analysis on data from First Bank of Nigeria Plc covering the period 2014–2024. Findings reveal that income smoothing has a positive and significant impact on ROI, suggesting that when managers stabilize earnings, it improves investor perception and enhances returns. Conversely, inventory manipulation has a significant negative effect on ROI, indicating that misrepresenting asset values undermines investor trust and reduces shareholder value. The regression model explains approximately 69% of the variation in ROI, with significant coefficients for both independent variables. These results support the assumptions of agency theory, highlighting the conflict between management and shareholder interests. The study concludes that while not all creative accounting practices are harmful, their misuse poses risks to financial integrity. It recommends stronger regulatory oversight, enhanced audit scrutiny, and transparent financial disclosures to safeguard shareholders’ interests and promote ethical reporting within Nigeria’s banking sector.