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
Highlights
1.1 Background of the study The primary objective of financial reporting is to provide high-quality financial reporting information concerning economic entities primarily financial in nature useful for economic decision making. (IASB 2008)
The fundamental idea of financial information quality is that some accounting information is better and more reliable than other accounting information in relation to its characteristic of communicating to users; as a result, accounting quality is of great interest to several types of users involved in the financial reporting chain (Pounder, 2013).financial reporting quality influenced by several factors
Type of auditor, regulatory enforcement, Governance, the accounting profession, business ethics, audit trend, users need and information technology systems are among the determinant factors affecting Quality of accounting information (Surroca, Tribo and waddok 2010;Ali, Ahmed & Henry 2004; Ray & Gupta 1993, Gajevszky, 2015)
Summary
1.1 Background of the study The primary objective of financial reporting is to provide high-quality financial reporting information concerning economic entities primarily financial in nature useful for economic decision making. (IASB 2008). Type of auditor, regulatory enforcement, Governance, the accounting profession, business ethics, audit trend, users need and information technology systems are among the determinant factors affecting Quality of accounting information (Surroca, Tribo and waddok 2010;Ali, Ahmed & Henry 2004; Ray & Gupta 1993, Gajevszky, 2015). Examine these factors assist users of accounting information to make informed future investment decisions
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