© 2019 JETIR May 2019, Volume 6, Issue 5 www.jetir.

org (ISSN-2349-5162)

THE IMPACT OF ACCOUNTING

SOFTWARE ON BUSINESS
PERFORMANCE OF FIRMS IN
COIMBATORE DISTRICT,
TAMILNADU
J.SENTHIL KUMAR
Ph.D. Research Scholar
PG & Research Department of Commerce
Government Arts College
Dharmapuri
Abstract
The objective of this paper is to investigate the impact of accounting software on
business performance of firms in Coimbatore District. This study is examined to help the
firm’s owners and manager in understanding the importance of using accounting
information system derived from accounting software to achieve the business
performance. The previous researches show that it is crucial for firms to use accounting
information system to ensure the survival and sustainability of business in the
increasingly competitive environment besides enhancing their business operations
competency and efficiency. This study uses several characteristics: efficiency, reliability,
ease of use, data quality and accuracy as influence of the use of accounting information
system on the performance of firms. The quantitative data required for this study is a
sample size of 78 participants that consists of accountants or employees who involve in
using accounting software in their work. The result indicates that the efficiency and ease
of use have significant impacts on business performance. Meanwhile, the other three
characteristics such as reliability, data quality and accuracy are not found to have a
significant impact on business performance. In overall, the results show that the
accounting software have impact on the firms’ business performance.

Key Terms: Accounting software, accounting information system, efficiency, reliability,

ease of use, data quality, accuracy and business performance.

1. Introduction

The increasing globalization of the world economy precipitated companies around

the world to compete in the global market place leading to emergence of a new set of
accounting challenges such as multiple currencies and follow a horde of accounting and
tax rules. Hence, a more sophisticated accounting software packages competent of
managing international accounting intricate issues is increasingly in need. But, the
tremendous technology advancement has rendered the options of utilizing the accounting
information from a strategic point of view. Adoption of accounting software becomes key
factor in determining the survival and success of an organization as companies require
more information, be it financial or non-financial, to deal with a higher scale of
uncertainties in the competitive market and require data processing capacity and system
to ameliorate to suit their Information needs in this global economy era. Hence, the
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© 2019 JETIR May 2019, Volume 6, Issue 5 www.jetir.org (ISSN-2349-5162)

purpose of this research paper is to analyze the influence of the accounting software
characteristic on the firm’s performance.

2. Literature review

Krishnamachari (2011) defines accounting system is an organized set of

documents, records, reports and procedure for preparation and timely delivery of accurate
financial data for economic decision making purposes (Krishnamachari, 2011).

Raymond and Bergeron (1995) state that computerized accounting system

integrates, simplifies and streamlines all the business processes cost-effectively easily and
helps reflect the true picture of the business ventures to stakeholders. This method of
book keeping is becoming popular with the decline of computers and accounting
programs pricing.

Srinath Gupta (2008) suggests that performance of firms will be enhanced with
integration of either a product or process oriented innovation strategy with investment in
IT/IS. The group of SMEs with high AIS alignment achieved better organizational
performance than firms with low AIS alignment

There is little research conducted on the impact of computerized accounting

system on business performance of firms in Coimbatore district. Therefore, this study
aims to fill in that knowledge gap.

FIGURE 1
Conceptual Framework

Characteristics of
Accounting
Software

Efficiency

Reliability
Business
Ease of Use
Performance
Data Quality

Accuracy

Independent Variables Dependent Variable

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© 2019 JETIR May 2019, Volume 6, Issue 5 www.jetir.org (ISSN-2349-5162)

2.1.1 Efficiency and business performance

Efficiency in business context refers to ability of firm to maximize firm value by

using the least inputs to achieve higher outputs. Efficiency increase profitability of the
firms. Therefore, this study hypothesizes that:

H1: There is a significant impact of software efficiency on business performance.

2.1.2. Reliability and business performance

Studies found a significant relationship in reliability of system to decision-making

satisfaction in an e-commerce environment. Accounting software system is reliable when
information delivered on time and with error free performance will result in timely and
efficient decision making, which in turn leads to better internal organizational efficiency.
Therefore, this study hypothesizes that:

H2: There is a significant impact of software reliability on business performance.

2.1.3. Ease of use and business performance

User will be contented in using the system due to ease of use. Few studies identify
a significant relationship between perceived ease of use and performance. Therefore, the
study hypothesizes that:

H3: There is a significant impact of software ease of use on business performance.

2.1.4. Data quality and business performance

Output of accounting information system very much depends on the data quality
as poor data quality will result in garbage in garbage out. More scientific studies on found
data quality and accounting information system performance are strongly related and
impact the perception of company internal auditors. Thus, this study hypothesizes that:

H4: There is a significant impact of software data quality on business performance.

2.1.5. Accuracy and business performance

The information is accurate and credible when it does not contain significant
errors, it is not biased, and users can trust that it accurately represents what it has set out
to be or what they expected to. With the aid of the software, accountants tend to improve
the overall accuracy of their record thus eliminating or reducing human error. Accuracy
of financial data is consistency and efficiency driver across the entire organization

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© 2019 JETIR May 2019, Volume 6, Issue 5 www.jetir.org (ISSN-2349-5162)

enhancing the company’s performance and the achievement of key business goals,
operationally and financially. Thus, this study hypothesizes that:

H5: There is a significant impact of software accuracy on business performance.

3. Research design

This research is designed by using exploratory, descriptive and explanatory

methods. In this study, quantitative research approach was adopted as it allows collecting
more data to investigate the facts, testing theories and hypotheses. Primary data were
collected for this research with the help of questionnaire. The questionnaire was
structured in a five point Likert format to extract the data or information. A total 150
questionnaires were distributed, 100 returned and out of 100, 22 questionnaires were
rejected due suspicious answers. This research used cross-sectional data collection
technique. The sampling technique used in this research was random probability sampling
method. For this study, target population is accountants or user of accounting software
working in companies operating in Coimbatore district.

4. Results and analysis

4.1. Demographic statistics

TABLE 1
Demographic Statistics
Valid
Variables Measures Frequency Percent Percent Cumulative Percent
Gender Male 29 35.8 37.2 37.2
Female 49 60.5 62.8 100.0
Experience in Using Accounting
Software 0-2 5 6.2 6.4 6.4
3-4 7 8.6 9.0 15.4
5-6 14 17.3 17.9 33.3
Over 7 52 64.2 66.7 100.0
Years of Service in current firm Up to 5 27 33.3 34.6 34.6
6 – 10 18 22.2 23.1 57.7
11 – 15 15 18.5 19.2 76.9
Over 15 18 22.2 23.1 100.0
Firm used Computerized System? Yes 78 96.3 100.0 100.0
Firm used Computerized Data
Recording? Yes 77 95.1 98.7 98.7
No 1 1.2 1.3 100.0
Software Package used by current
firm Sage 14 17.3 17.9 17.9
Quick
Books 5 6.2 6.4 24.4
SAP 21 25.9 26.9 51.3
Peachtree 3 3.7 3.8 55.1
Auto count 18 22.2 23.1 78.2
Others 17 21.0 21.8 100.0

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4.2. Descriptive analysis and normality analysis

This research comprise of five independent variables and one dependent variable.
The dependent variable is business performance which is measured using efficiency,
reliability, ease of use, data quality, and accuracy. The skewness and Kurtosis value were
within ±1 indicates the distribution for this study is normal. All the independent variables
and dependent variable indicate normally distributed since it the value were within ±1.

TABLE 2
Descriptive and Normality Statistics

Std.
N Minimum Maximum Mean Deviation Skewness Kurtosis
Statistic Statistic Statistic Statistic Statistic Statistic Std. Error Statistic Std. Error
Business Performance (BP)
78 3 5 4.05 .597 .015 .272 -.593 .538

Accuracy (A) 78 2 5 4.14 .708 -.821 .272 .091 .538

Reliability (R) 78 3 5 4.39 .631 -.791 .272 -.443 .538
Efficiency (Ef) 78 2 5 4.11 .642 -.662 .272 .183 .538
Ease of Use (EOU) 78 3 5 4.33 .605 -.610 .272 -.392 .538
Data Quality (DQ) 78 3 5 4.37 .578 -.792 .272 .236 .538
Valid N (list wise) 78

4.3. Reliability analysis

The below table show all constructs in this research are reliable where the values
are ranged between 0.80-0.90 as based on a general accepted rules describing internal
consistency using Cronbach's alpha.

TABLE 3
Cronbach’s Alpha Coefficients

Constructs Number of Items Cronbach's Alpha

All variables 42 0.975
Efficiency 7 0.879
Reliability 9 0.924
Ease of use 6 0.821
Data quality 6 0.857
Accuracy 7 0.858
Business performance 7 0.911

4.4. Regression analysis

Table 4 shows that this model is found to be a good fit as it predicted above 60 per
cent of the entire model whereby indicating that 69.1 per cent of the variance of
accounting software characteristics can be predicted by the independent variables of
efficiency, reliability, ease of use, data quality and accuracy. The ANOVA statistics is
used and it concludes that the regression model is statistically significant.

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© 2019 JETIR May 2019, Volume 6, Issue 5 www.jetir.org (ISSN-2349-5162)

TABLE 4
Regression Model Summary

Model Adjusted R Std. Error of the

R R Square Durbin-Watson
Square Estimate
1 .843a .711 .691 .33183 1.546

5. Results and discussions

Table 5 displays the results of hypothesis testing for the five independent
variables based on the significant value from regression analysis. For software efficiency
and ease of use has a moderate and significant impact of 46 per cent and 36.5 per cent on
business performance respectively with the p-values (Sig.) less than 0.05. This indicates
that software efficiency and ease of use place a significant impact on the business
performance of business firms. Furthermore, there are many previous studies supported
the ease of use characteristics increased the firm performance such as increase the sales
and revenues, favourable positive attitudes, productivity and customer satisfaction. The
software data quality has a negligible -8.7 per cent impact on business performance which
is also not statistically significant as p-value (Sig.) is more than 0.05. The standardized
beta coefficient for software accuracy and reliability are 0.066 and 0.118 shows a 6.6 per
cent and 11.8 per cent of a positive impact of the independent variable on dependent
variable with a significance value of 0.462 and 0.275 respectively. This indicates that
software reliability places an insignificant impact on the business performance of
business firms. For accuracy, the result also shown contradicts with past research
findings.

TABLE 5
Coefficient

Unstandardized Standardized Co linearity Statistics

Model Coefficients Coefficients t Sig.
Std.
B Error Beta Tolerance VIF

1 (Constant)
.405 .319 1.270 .208
Accuracy .055 .075 .066 .739 .462 .509 1.965
Reliability .112 .102 .118 1.101 .275 .348 2.875
Efficiency .428 .096 .460 4.441 .000 .373 2.677
Ease of use .361 .102 .365 3.547 .001 .378 2.643
Data Quality -.090 .091 -.087 -.983 .329 .516 1.937

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TABLE 6
Hypotheses Testing Results
Beta Significant
Hypotheses Decision Interpretations
Coefficient (P<0.05)
H1: There is a significant 0 The beta coefficient of 0.460
positive impact of Software 0.46 Significant as the Accepted indicates that Software Efficiency
Efficiency on Business calculated p-value has a 46.0% positive impact on
Performance is less than 0.05. business performance.

H2: There is a significant 0.275 The beta coefficient of 0.118

positive impact of Software Not Significant as indicates that Software Reliability
Reliability on Business 0.118 the calculated p- Rejected has a 11.8% positive impact on
Performance value is more than business performance.
0.05.
H3: There is a significant 0.001 The beta coefficient of 0.365
positive impact of Software 0.365 Significant as the Accepted indicates that Software Ease of
Ease of Use on Business calculated p-value Use has a 36.5% positive impact
Performance is less than 0.05. on business performance.
H4: There is a significant 0.329 The beta coefficient of 0.329
positive impact of Software Not Significant as indicates that Software Data
Data Quality on Business -0.087 the calculated p- Rejected Quality has a 32.9% positive
Performance value is more than impact on business performance.
0.05.
0.462
H5: There is a significant The beta coefficient of 0.066
positive impact of Software Not Significant as indicates that Software Accuracy
Accuracy on Business 0.066 the calculated p- Rejected has a 6.6% positive impact on
Performance value is more than business performance.
0.05.

6. Conclusion

In conclusion, accounting software systems is of great importance and has a great

value to businesses, organization and the economy. The accurate and reliable information
flow is very crucial to the growth of economy. Performance management plays a key role
in improving the overall value of an organization. This study showed that there is strong
relationship between the characteristic of accounting software and business performance,
which means access to accurate accounting information, will lead to organizational
effectiveness. Therefore, it can be concluded that accounting software has an impact on
business performance of firms in Coimbatore district.

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7. Reference
Adhikari, A., Lebow, M.I., & Zhang, H. (2014). Firm Characteristics and Selection of
International Accounting Software. Journal of International Accounting,
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Calvin, B. (2002). Towards Paperless Accounting and Auditing. Finland: E-

Business Research Center, pp.1-12.

Dibrell, C., Davis, P.S., & Craig, J. (2008). Fueling Innovation through Information
Technology in SMEs. Journal of Small Business Management, 46 (2), 203-
218.

Krishnamahachari (2011). A Study of a Measure of Sampling Adequacy for Factor-

Analytic Correlation Matrices. Multivariate Behavioral Research, 12 (1), 43-
47.

Murali Krishna (2011). Repositioning Accounting Information System through

Effective Data Quality Management: A Framework for Reducing Costs and
Improving Performance. International Journal of Scientific Technology
Research, 1 (10).

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