Digital accounting system and its effect on corporate governance: An empirical investigation

Abstract

AbstractThis empirical investigation explores the impact of the digital accounting system (DAS) on corporate governance (CG). The rapid advancement of technology has revolutionized various aspects of business operations, including accounting processes. The transition from traditional manual accounting systems to digital platforms has been accompanied by significant changes in corporate governance practices. This study aims to investigate the influence of DAS effectiveness (bookkeeping system, DAS security, IFRS adoption, and budgeting system) and the success of DAS (system quality, information quality, and service quality) on CG. The study determined the relationship by conducting a questionnaire survey of 264 senior managers, accountants, and department heads of pharmaceutical companies in Yemen. Partial Least Squares (PLS) was used for data analysis. The results supported all assumed relationships except the relationship between the budgeting system and CG. Specifically, unlike all supposed relationships, the budgeting system had no significant impact on CG. Despite the fact that prior studies have investigated these issues from different aspects in developed countries, the evidence in less developed countries is still unknown. Further, revisiting DAS and CG aspects with different new insights and measures, particularly bookkeeping system, DAS security, IFRS adoption, budgeting system, system quality, information quality, and service quality, has not been the subject of prior studies. As a result, the present study bridges a serious gap in the existing stock of knowledge in DAS and CG studies. Moreover, this piece of research has useful implications for managers, investors, practitioners, academicians, and decision‐makers.