Factors Affecting Financial Reporting Quality of Commercial Banks: The Mediating Role of Accounting Information System Quality

Abstract

This study examines the determinants of financial reporting quality in commercial banks, with accounting information system quality serving as a theoretically specified mediating mechanism. To avoid conceptual ambiguity, financial reporting quality is defined as the broader quality of the reporting process and its information outputs, whereas financial statement quality is treated as one observable manifestation of that broader construct. Drawing on the information systems success perspective, the resource-based view, and institutional theory, the study links human competence, organizational control, regulatory compliance, managerial support, and technological application to accounting information system quality and financial reporting quality. The qualitative phase used semi-structured discussions with 30 officers responsible for accounting, internal control, regulatory reporting, and information systems in commercial bank branches to refine the model and questionnaire. The quantitative phase surveyed accountants, controllers, internal auditors, financial officers, and IT staff involved in accounting systems at commercial banks. Of 700 questionnaires distributed, 635 valid responses were retained for structural equation modeling. Reliability, convergent validity, discriminant validity, multicollinearity, common-method diagnostics, structural paths, and indirect effects were assessed. The results support all proposed hypotheses. Accounting staff competence, internal control system, regulatory compliance, top management support, and information technology application positively affect accounting information system quality. Information technology application shows the largest standardized association with accounting information system quality, although coefficient differences are interpreted cautiously because formal pairwise coefficient-comparison tests were not conducted. Accounting information system quality positively affects financial reporting quality, and information technology application also has a direct positive effect. Product-of-coefficients estimates indicate mediated pathways through accounting information system quality, with the strongest indirect pathway from information technology application to financial reporting quality. The findings suggest that commercial banks should improve financial reporting quality by combining digital transformation, accounting information system enhancement, internal control strengthening, staff competence development, managerial commitment, and regulatory compliance.