Moderating Role of Organizational Culture in the Influence of Computerized Accounting Systems on Financial Reporting Quality in Small and Medium Enterprises

Abstract

The increased adoption of computerized accounting systems by small and medium enterprises (SMEs) around the world has considerably attracted the attention of researchers to studies and discussions on the subject of computerized accounting systems and their impact on various aspects of the accounting function. Extant studies have indicated the existence of a strong, positive and significant relationship between computerized accounting systems usage and financial reporting quality. Particularly,  recent study conducted by Itang (2021a), which investigated the relationship between computerized accounting systems and financial reporting quality among small and medium enterprises in Nigeria, showed that computerized accounting systems usage has a strong and significant influence on the quality of financial reporting information in terms of relevance, faithful representation, comparability, verifiability, and understandability. However, studies have also shown that certain factors, such as organizational culture, could influence the relationship between organizational variables. Therefore, this study sought to extend the findings of Itang (2021a) by examining the moderating effect of organizational culture on the influence of computerized accounting systems on financial reporting quality in small and medium enterprises in Nigeria. Hence, the study introduced organizational culture as a moderating variable into Itang (2021a) study model. Organizational culture was decomposed into three dimensions, namely people orientation, innovation, and outcome orientation. The study employed the same survey research methodology and dataset that were used in Itang (2021a) in conjunction with the research data on organizational culture that were collected concurrently then from a sample of 370 firms selected randomly from SMEs in the South-South region of Nigeria, of which 223 responses were found useful. The research data were analysed using structural equation modelling technique. Five hypotheses relating to the extent to which organizational culture moderates the influence of computerized accounting systems on financial reporting quality in terms of relevance, faithful representation, comparability, verifiability, and understandability, were tested. The results of the study indicate that organizational culture significantly and positively moderates the relationship between computerized accounting systems and financial reporting quality in terms of relevance, faithful representation, comparability, verifiability, and understandability. Therefore, all five null hypotheses were rejected. Consequently, the researcher concluded that organizational culture significantly and positively moderates the relationship between computerized accounting systems and the quality of financial reporting information in SMEs. The researcher has suggested areas for further studies that would help validate and, or, extend the study’s findings.

Keywords: Accounting information, Accounting information system, Accounting software, Accounting systems, Comparability, Computerized accounting system, Contingency theory, Faithful representation, Financial information, Financial reporting, Financial reporting information, Financial reporting quality, Innovation-oriented culture, Moderating effect, Organizational culture, Outcome-oriented culture, People-oriented culture, Relevance, Small and medium enterprises, Structural equation modelling, Understandability, Verifiability.

DOI: 10.7176/RJFA/12-24-03

Publication date: December 31^st 2021