Factors affecting on the quality of financial reports in small and medium size enterprises

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Abstract

This study seeks to examine the influence of financial literacy, educational level, information technology, and the implementation of Financial Accounting Standards for small and medium-sized enterprises (FAS SMEs) on the quality of financial reports for restaurant small and medium business enterprises in the Banyumas region of Indonesia. A sample of 100 restaurants was selected from a population of approximately 300 small and medium-sized restaurants using a simple random sampling method with the Slovin’s formula. Data was collected by distributing questionnaires. Out of a total of 300 questionnaires, 100 were received back. Subsequently, the data was subjected to multiple linear regression analysis. Based on the resource-based hypothesis, the findings indicate that the use of information technology and the adoption of FAS SMEs have a beneficial impact on the quality of their financial reports. However, financial literacy and educational level do not have any effect. This study, despite its limited sample size, contributes to the advancement of knowledge in the field of financial accounting for SMEs, specifically in emerging countries like Indonesia. It achieves this by offering empirical data on the factors that influence the quality of financial reports for SMEs.

Keywords: FAS SMEs, Financial Literacy, Education Level, Information Technology, Quality of Financial Report

Authors’ individual contribution: Conceptualization — R.B. and D.S.; Methodology — D.S. and S.G.; Writing — Original Draft — R.B. and E.S.; Writing — Review & Editing — D.S. and S.G.; Supervision — D.S. and S.G.; Project Administration — D.S. and S.G.; Funding Acquisition — R.B. and D.S.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: M41, M49, P13

Received: 15.10.2023
Accepted: 25.04.2024
Published online: 29.04.2024

How to cite this paper: Budianto, R., Susanto, D., Ginanjar, S., & Suyono, E. (2024). Factors affecting on the quality of financial reports in small and medium size enterprises. Risk Governance and Control: Financial Markets & Institutions, 14(2), 15–24. https://doi.org/10.22495/rgcv14i2p2