International Journal of Applied Economics, Finance and Accounting

Institutional quality as a catalyst for structural transformation in African countries: What role does foreign direct investment play?

Abdelhamid Ait Bihi — 2024-10-18

The socio-economic development of African countries is strongly influenced by the impact of foreign direct investment (FDI) flows and the quality of these countries' institutions. This paper examines the role played by the quality of these countries' institutions as a pillar in the process of structural transformation (ST) in African countries considering the relationship between FDI and institutional quality. This led to the completion of a thorough econometric analysis that estimated two Panel Auto Regressive Distributed Lag (ARDL) models and concentrated on the complex relationships between the study's variables. The econometric results obtained showed a negative and significant effect of FDI on the quality of institutions in the long term as reflected by two dependent variables: the degree of freedom from corruption and the degree of freedom of ownership. Thus, the results show the major constraints African countries faced in terms of property rights, corruption and the implementation of good governance practices, underscoring the need for radical institutional reform to foster these crucial dimensions of socio-economic functioning. In addition, the study’s result demonstrated the crucial role that institutional quality within the African continent can play in the success of its ST process. Indeed, the positive impact of institutional quality on FDI attractiveness and the implementation of effective development policies could foster an environment conducive to achieve inclusive growth. Finally, the results of the study can help decision-makers define the policies essential to the success of the ST process in African countries.

The impact of fintech on the profitability of Chinese commercial banks

Wang Haoliang — 2024-10-18

This study assesses the transformative impact of financial technology (fintech) on the profitability of Chinese commercial banks, with a focus on addressing the challenge of endogeneity in financial data analysis. The study uses the systematic generalized method of moments (GMM) to compare the results with those from fixed-effects models in order to make the findings more reliable. The results reveal that fintech significantly impacts bank profitability, predominantly in a negative manner. This underscores the pressing need for banks to adapt and innovate, responding proactively to the fintech disruption. The practical implications of this study suggest that banks should not only invest in research and development within fintech but also tailor strategic responses according to bank types and establish a comprehensive financial services ecosystem to bolster their competitive edge and profitability. The findings are critical for bank executives and policymakers aiming to navigate the challenges posed by fintech innovations.

Readiness of government employees on workplace digital transformation and its correlation to employees’ productivity using Herzberg two-factor theory

Fhrizz De Jesus — 2024-10-22

This research study evaluates the preparedness of government employees to implement digital transformation and its impact on employee productivity by incorporating Herzberg's Two-Factor Theory. The Philippine government has launched several automation and digitalization initiatives to enhance public administration and increase accessibility to government services. However, digital transformation has posed challenges to employee productivity and motivation, leading to inefficiency and a lack of incentive to perform tasks due to employees' unawareness of various aspects of digitalization. The study employs a quantitative correlation research design, utilizing statistical treatments such as Weighted Mean and Pearson R to analyze and interpret the data. According to the findings, while government employees are ready and willing to embrace digital change, there is potential to increase the effectiveness of digital technologies in reducing workplace stress and improving overall well-being. The study also found a significant relationship between the readiness of government employees for workplace digital transformation and their productivity, as explained by Herzberg's Two-Factor Theory.

Enhancing financial management in healthcare: The impact of Activity-Based Costing and Time-Driven Activity-Based Costing methodologies in Kordan's private sector in Jordan

Loona Mohammad Azmi Shaheen — 2024-10-25

This study examines the effectiveness of implementing Activity-Based Costing (ABC) and Time-Driven Activity-Based Costing (TDABC) in Jordan’s private healthcare sector focusing on managing costs while maintaining quality care. A descriptive and analytical approach was adopted involving 213 individuals working in the financial affairs departments of private hospitals in Amman representing various types of institutions. The key variables of interest were the accuracy of cost measurement, expense reduction, cost allocation and various cost management approaches. The main findings indicate that implementing ABC and TDABC significantly improved cost management and cost reduction within these institutions. These systems have been effective in enhancing the accuracy of cost measurement, improving profitability, reducing unnecessary expenses, and achieving better cost allocation, thereby leading to better financial stewardship. This study underscores the critical importance of integrating these systems into healthcare financial frameworks. Moreover, it highlights the need for further training for financial managers and accountants to fully leverage these approaches and contribute to ongoing improvements in healthcare financial management. Additionally, this research presents empirical evidence from an underrepresented region where no prior studies have been conducted, thereby contributing to the existing body of knowledge and offering valuable insights for future initiatives in Jordan. The study also provides useful guidance for implementing these cost-management approaches more broadly in other regions and countries.

The artificial intelligence in auditing: Corporate behaviour and technological adoption in an emerging market

Ines Bouaziz Daoud — 2024-10-25

The objective of this research is to offer an empirically grounded assessment of the intention of the auditing profession to adopt "disruptive" technologies. This study investigates, using data collected from employees of the Big Four firms in Tunisia, the determinants that drive auditors to adopt blockchain technology (BT). To achieve this objective, in 2022, 53 auditors from the "big four" enterprises in Tunisia, including both certified auditors and auditing students in training, participated in a survey. The study employs statistical methods and ordinary least squares (OLS) regression to identify the associations between the intention to implement BT and the five variables under investigation. The study examines perceived utility, ease of use, trust, support cost (SC), and facilitating condition (FC) while drawing on a number of theories, including the Technology Acceptance Model (TAM). Results show that two factors, particularly perceived utility for auditing (PUA) practice and trust, drive auditing professionals' intention among Big Four companies to use BT. This study results illuminate the factors motivating Big Four companies to embrace BT, enabling the development of strategies to expedite the adoption and utilization of this technology in developing accounting and auditing firms. The study fills a gap in the literature about adopting BT in emerging economies by concentrating on this specific setting. This study contributes to the knowledge of technology adoption and provides valuable recommendations for accelerating the uptake and application of BT in this particular setting.

Effect of financial deepening and institutional factors on industrial value added: Evidence from Sub-Saharan Africa

Ogundajo Grace Oyeyemi — 2024-10-25

This research evaluates the effect of financial deepening and institutional factors on industrial value. Africa, rich in natural resources, stands poised for resource-based industrialization, yet many nations continue to export raw materials with minimal processing. According to World Bank data, Sub-Saharan African countries have seen a decrease in industrial value added over the years. This decline is partly due to insufficient integration between agriculture and manufacturing. The primary factors in converting raw materials into finished products are labor and capital. While Africa is abundant in intellectual capital, it faces challenges with financial capital. Despite the critical role of financial development in enhancing industrial sectors, institutional factors also play a significant role. This study, which involved 38 Sub-Saharan African nations, analyzes the impact of financial development and institutional factors on industrial value added using multiple linear regression. The findings reveal that both financial development and institutional quality positively influence industrial value added, particularly highlighting the importance of bank capital adequacy, ATM availability, regulatory quality, corruption control, and governance. On the other hand, exchange rates, foreign direct investment, trade openness, and inflation all have a negative impact on industrial value added.

The political connection, stakeholders pressure, sustainability reports disclosure, and business risk as moderating variable

Mukhtaruddin — 2024-10-25

The objectives of this research investigated the effect of political connection, stakeholder pressure (environmental pressure, customer’s pressure, employee’s pressure, and foreign pressure) on the sustainability report disclosure and business as a moderating variable. Manufacturing sector companies listed on the Indonesian Stock Exchange for the 2019–2023 periods have a target population. Samples were selected by some criteria, and the 15 manufacturing companies were determined as a sample. The annual report and sustainability report are the sources of the data. To test hypotheses, we are using multiple regression and moderate multiple regression analysis. The employee pressure and environmental pressures do not significantly affect the sustainability report disclosure, while political connections, consumer pressure, and foreign pressure have a significant effect on the sustainability report disclosure. Business risk can moderate the relationship between consumer pressure and sustainability report disclosure, while it cannot moderate the relationship between political connection, environmental pressure, employee’s pressure, and foreign pressure and sustainability reports. The findings of this research have some implications for companies and governments. The company should pay attention to political connections and customer pressure because it can effect a decision related to disclosure of the sustainability reports, and (b) government determines the sustainability report standard.

Accounting conservatism and financial performance through book value: Evidence from manufacturing enterprises listed in Vietnam

Hong Thi Nguyen — 2024-10-28

This study examined the relationship between accounting conservatism (AC) and financial performance for 231 manufacturing companies listed in Vietnam on the Hanoi Stock Exchange and Ho Chi Minh Stock Exchange stock exchanges between 2019 and 2022 using book value which includes ROA, ROE, and ROS. Accounting conservatism harms ROA, ROE, and ROS throughout six years from 2017 to 2022, according to a multivariable regression study using Ordinary Least Square (OLS), FEM, REM, and FGLS models on Stata. In addition, the COVID-19 pandemic has affected the global economy in general and manufacturing enterprises listed in Vietnam in particular, so the authors also analyze the influence of AC on financial performance in two periods, before and after COVID-19. The results obtained in the pre-COVID-19 period (from 2017 to 2019) are the same as those of the 6 years. However, from 2020 to 2022, AC has an adverse effect on ROA and ROE. Nonetheless, ROS is unaffected by AC. The article has given some discussion and recommendations to stakeholders including the government, auditors, and accountants at enterprises regarding the level of AC in enterprises to help users of financial information make the most optimal economic decisions.