Factors Affecting Financial Reporting Quality of Business Firms in Debre Markos Town

Abstract

This study investigates the factors which affecting financial reporting quality of business firms In Debre Markos Town. The study adopts a mixed methods research approach by combining data gathering instruments of research questions, in-depth interviews and document analysis. The questionnaire data were analyzed using descriptive statistics, correlations, and logistic regression analysis and data from interview and document reviews were interpreted qualitatively. The findings of the study show that, that all the variables in the study affect the financial reporting quality; however, the degree of effect of each variable was different. Study found financial reporting quality is significantly and positively influenced by information technology, regulatory enforcement and audit trend. Regulatory enforcement and audit trend factors were positively and strongly correlated with financial reporting quality. Information technology factors has moderate and positive relationships. Business ethics and user’s needs has weak and positive correlation. The study suggests that improving usage of information technology, make frequent auditing and maintain regulatory enforcement uses helps to improve their financial reporting quality.

Keywords: Financial reporting quality, Business firms, information technology, regulatory enforcement, business ethics, users need.

DOI: 10.7176/RJFA/11-13-03

Publication date:July 31st 2020