From Digital Accounting to Better Managerial Decisions: The Mediating Role of Accounting Information Quality in SMEs

Abstract

The rapid adoption of digital technologies has encouraged small and medium-sized enterprises (SMEs) to implement digital accounting systems to improve financial management and support managerial decision-making. However, the adoption of digital accounting alone does not necessarily lead to better managerial decisions unless it generates high-quality accounting information. This study aims to examine the effect of Digital Accounting on ManagerialDecision-Making through the mediating role of Accounting Information Quality among SMEs in Central Java, Indonesia. A quantitative research approach was employed using a cross-sectional survey of 106 SME owners and managers from several regencies and municipalities in Central Java. The data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS 4. The findings reveal that Digital Accounting has a significant positive effect on Accounting Information Quality, while Accounting Information Quality significantly enhances Managerial Decision Making. In contrast, the direct effect of Digital Accounting on Managerial Decision-Making is not significant. Furthermore, Accounting Information Quality fully mediates the relationship between Digital Accounting and Managerial Decision Making. These findings indicate that the managerial value of digital accounting lies not merely in technology adoption but in its ability to produce accurate, reliable, relevant, complete, and timely accounting information. The study contributes to the accounting information systems literature by explaining the mechanism through which digital accounting creates managerial value and provides practical insights for SME owners and policymakers in promoting effective digital transformation.