Accounting capabilities and financial reporting quality in emerging-economy MSMEs
DOI:
https://doi.org/10.35335/ijafibs.v14i1.493Kata Kunci:
Digital Accounting Capability, Financial Reporting Quality, Management Accounting Practices, MSMEs, Sustainability Accounting PracticesAbstrak
This study examines how digital accounting capability, management accounting practices, and sustainability accounting practices influence financial reporting quality among micro, small, and medium-sized enterprises (MSMEs) in Kendari City, Indonesia, with accounting information system quality positioned as a mediating mechanism. Drawing on a capability-based and decision-usefulness perspective, this study argues that MSME financial reporting quality depends not only on digital accounting adoption but also on managerial accounting routines and sustainability-oriented documentation. Survey data were collected from 322 MSME actors and analyzed using partial least squares structural equation modeling (PLS-SEM). The findings show that digital accounting capability and sustainability accounting practices significantly enhance accounting information system quality. However, accounting information system quality does not significantly improve financial reporting quality and does not mediate the relationships between accounting capabilities and financial reporting quality. Instead, management accounting practices and sustainability accounting practices emerge as the strongest direct determinants of financial reporting quality. These results indicate a capability-reporting gap, where digital and system-based accounting capabilities improve accounting information systems but do not automatically translate into high-quality financial reports. The theoretical contribution of this study lies in integrating digital, managerial, and sustainability accounting capabilities into a single explanatory model and demonstrating that sustainability accounting practices are a central antecedent of financial reporting quality in regional MSMEs. Practically, the findings suggest that MSME development programs should combine digital accounting training with management accounting literacy, sustainability documentation, and formal financial reporting routines.
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