Impact of accounting information system on corporate governance: evidence from Pakistani textile sector

Abstract

Purpose Efficient corporate governance is always important to safeguard the interest of all the stakeholders in the business environment. Therefore, this study focuses on the investigation of the relationship between accounting information systems (AIS) and corporate governance in the textile sector of Pakistan. The textile sector is the backbone of the Pakistani economy and has an important contribution toward the gross domestic product and as well as exports of the country. Design/methodology/approach The data were collected from the finance managers with the sample size of 300 firms of All Pakistan textile mills association, self-delivery and collection method used. Both descriptive and inferential statistics used to analyze data through the Statistical Package for Social Sciences 23. Findings The findings of this study proved that AIS has a significant impact on corporate governance. It is important from the management point of view to record the daily transaction in a better way with the use of a specific system and every member uses the computerized system to accomplish their tasks in the organization. Originality/value The textile industry is the backbone of Pakistan’s economy. The study conducted in this paper by primary data and drawing original contributions in the existing literature. Moreover, the findings of this study are going to have considerable theoretical and practical implications for the market.

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

“…Finally, the budgeting system did not significantly affect CG (H4), contrary to previous research by Uyar et al (2017). This result is unexpected as it contradicts the widespread belief that BUS is an indispensable tool for CG (Fatima et al, 2021;Romney & Steinbart, 2016). The study in the Czech Republic found that attitudes toward budgeting have changed in recent years, with some experts suggesting that companies should go "beyond budgeting" and abandon budgeting in practice.…”

“…The development in IT, fierce market competition, increased sophistication of dealings with customers and suppliers, making errors, and unethical manipulative activities of businesses have brought to the fore the critical role of DAS, especially concerning corporate governance (Alnajjar, 2017; Fatima et al, 2021; Napitupulu, 2020; Uyar et al, 2017). On the other hand, the evolution of corporate governance (CG) and the advancement of IT have compelled businesses to switch from conventional accounting systems to DAS (Jasim & Raewf, 2020; Zhang et al, 2023).…”

“…Indeed, a well‐functioning DAS could improve CG in firms, build a better business world, boost investor trust, and help capital markets efficiency (Uyar et al, 2017). DAS is vital to improving governance effectiveness because lousy governance leads to audit and accounting scandals, undermines investor trust, harms the capital market, misuses corporate resources, encourages fraud, and causes reputational harm (Fatima et al, 2021; Pharmaceutical Technology, 2022). Therefore, a high‐quality CG is required not only to maintain the favorable reputation of firms but also to stabilize profitability and promote long‐term growth (Shakil et al, 2019).…”

“…DAS significantly influence corporate governance by enhancing data accuracy, transparency, efficiency, risk management, data security, audit trails, accountability, and communication (Al‐Hattami, 2021; Al‐Hattami, Hashed, & Kabra, 2021; Floropoulos et al, 2010). DAS enables real‐time data processing and reporting, reducing errors and providing a transparent view of financial information (Al‐Fatlawi et al, 2021; Fatima et al, 2021). They streamline accounting processes, making financial information available quickly for informed decision‐making (Al‐Hattami, Hashed, & Kabra, 2021).…”

“…CG is relevant to firms of any size and in any market as it has a number of benefits, such as performance improvement and improved risk management and cost control (IFC, 2016). Most businesses are disturbed when management is weak and CG practices are not at the required level (Fatima et al, 2021). This prompted many researchers to pay great attention to administrative issues, especially CG.…”