Effect of Accounting Information System on Firm Performance. Using the Banking Sector as a Case Study
OBJECTIVE OF THE STUDY
- Examine the relationship between accounting information system and profitability in the banking sector in Nigeria.
- Determine the relationship between accounting information system and Earning per share.
- To examine the impact of accounting information system application on improving employee’s satisfaction in banks according to banks
- To examine the impact of accounting information system application on improving what customer saying about banks services according to banks managers’ perspective.
REVIEWED OF RELATED LITERATURE
Several theoretical underpinnings underlie the subject matter of accounting information system on reporting quality. Some of these theories include: Contingency theory, Innovation Diffusion Theory, Theory of Reasoned Action and Its Derivatives in User Acceptance, Innovation Diffusion Theory, Theory of Planned Operational Control, Socio-Technical Systems Theory of Information Technology Acceptance, and Activity Theory.
Contingency theory suggests that an accounting information system should be designed in a flexible manner so as to consider the environment and organizational structure confronting an organization (Nzomo, 2013).
Gordon and Miller (1976) laid out the basic framework for considering accounting information systems from a contingency perspective where the accounting information systems also need to be adaptive to the specific decisions being considered within a framework.
Innovation Diffusion Theory
Diffusion innovation theory predicts the process by which is perceived to be new by a unit of adoption is communicated through certain channels amongst members of a system over time.
According to Shy (1997), diffusion theory posits five characteristics of innovations that affect their diffusion: trialability (the opportunity to try an innovation before committing to use it), relative advantage (the extent to which a technology offers improvements over currently available tools), compatibility (its consistency with social practices and norms among its users), complexity (its ease of use or learning), and observability (the extent to which the technology’s outputs and its gains are clear to see).
Theory of Reasoned Action and Its Derivatives in User Acceptance
Theory of Reasoned Action (TRA) defines relationships between beliefs, attitudes norms, intentions, and behavior. According to this theory, an organizational behavior (e.g., use or rejection of technology) is determined by one’s intention to perform the behavior, and this intention is influenced jointly by the organizational attitude and subjective norm, defined as “the organization’s perception that most businesses/clients who are important to it think it should or should not perform the behavior in question” (Zozak, 2005). According to TRA, attitude towards a behavior is determined by beliefs about the consequences of the behavior and the affective evaluation of those consequences. Belief is defined, by Zozak (2005), as the organizational subjective probability that performing a given behavior will result in a given consequence. Affective evaluation is “an implicit evaluative” to the consequence; thus the attitude construct in TRA is general in nature and is not anchored to any given belief set. This approach represents an information processing view of attitude formation and change which states that external stimuli influence only through changes in the organization’s belief structure (Zozak, 2005).
Theory of Planned Operational Control
According to Model (1996), the Theory of Planned Operational Control (TPOC) is a descendant of the theory of reasoned action (TRA) and adds a third antecedent of intention, perceived operational control, to the TRA model. Perceived operational control is determined by the availability of skills, resources, and opportunities, as well as the perceived importance of those skills, resources, and opportunities to achieve outcomes. The Theory of Planned Operational Control (TPOC) holds that attitudes, subjective norms, and perceived operational control are direct determined of intentions, which in turn influence accounting operations
Socio-Technical Systems Theory of Information Technology Acceptance
The socio-technical systems perspective has become influential in the analysis of the organizational impact of information technology. The theory views any organization as an open system of interdependent sub-units transforming inputs to desired outputs. The gainful employment of any technology hinges on the ability and willingness of users to employ it for worthwhile tasks (i.e., those deemed central to the organization’s goals). Socio-technical systems theory has given birth to a framework for technology design that emphasizes holistic job satisfaction (rather than just task performance) and user participation throughout the development process. Thus, socio-technical theorists recommend the analysis of all stakeholders, not just the direct users of a technology, the formation of planning groups to oversee the design, the performance of prototyping exercises, and the analysis of likely impact the technology will have on the organization. In studying technology acceptance, socio-technical theorists conceptualize acceptance in terms of two competing forces: control and enhancement. Control factors are those that impose rules or structures upon the users, thereby removing autonomy (control over their own actions) from them. Among the control issues raised with respect to technology design are: access, reliability, confidentiality, monitoring, pacing, stress, social contact. Low or high presence of certain factors (e.g., low reliability, high pacing) with the introduction of a new technology is likely to reduce the user’s perception of control and thus increase the risk of resistance (Connor, 1997). Enhancement factors include sense of mastery, growth of knowledge, discretion, ability to act informally, requirement for certain skills, and enabling worker cooperation. A technology that is designed to support such factors is likely to increase user acceptance in an organization.
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine effect of accounting information system on firm performance. Banking sector in Lagos state form the population of the study.
DATA PRESENTATION AND ANALYSIS
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
SUMMARY, CONCLUSION AND RECOMMENDATION
It is important to ascertain that the objective of this study was to ascertain effect of accounting information system on firm performance. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing an effect of accounting information system on firm performance
This study was on effect of accounting information system on firm performance. Three objectives were raised which included: Examine the relationship between accounting information system and profitability in the banking sector in Nigeria, determine the relationship between accounting information system and Earning per share, to examine the impact of accounting information system application on improving employee’s satisfaction in banks according to banks and to examine the impact of accounting information system application on improving what customer saying about banks services according to banks managers’ perspective. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from banking sector in Lagos. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Accounting information system had been widely used by many organizations to automate and integrate their business operations, where many businesses adopt this system to improve their business efficiency and increase competitiveness. The qualitative characteristic of any Accounting Information System can be maintained if there is a sound internal control system to ensure the achievement of operational goals and performance.
The biggest impact IT has made on accounting is the ability of companies to develop and use computerized systems to track and record financial transactions. Paper ledgers, manual spreadsheets and hand-written financial statements have all been translated into computer systems that can quickly present individual transactions into financial reports.
Reports issued to users have been improved by computerized accounting systems. Improved reporting allows users to determine if an organization is a good investment for growth opportunities and has the potential to be a high-value entity.
Furthermore empirical literature of prior studies reviewed have shown that accounting information system adoption does increases firm’s performance, profitability, and efficiency of operations.
The vast directions of accounting information system on financial reporting quality presents the most important relations between the challenges and technological responses in pointing out the way for future research in order to improve the alignment between adopted technology and organization performance. The study therefore recommends further investigations into the relationship between accounting information system and financial reporting quality especially in technological adapting economies such as Nigeria.
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