Abstract:
The research aims to examine the effect of quality of Accounting Information System (AIS) on financial
performance of listed companies in Sri Lanka. Out of 290 listed companies, 165 companies were
selected as a sample using Proportionate Stratified Random Sampling technique and the sample size
was calculated via sample size calculator in the web using a 95% confidence level and 5% confident
interval. Quality of AIS was measured through system flexibility, system sophistication, effectiveness of
the system and system control as per the Contigeny Theory and Innovation Diffusion Theory. Both
primary (questionnaire) and secondary (annual report) data are combined in the study. A self administrated questionnaire was issued to collect the quality of AIS, whereas the financial performances
of such companies were evaluated under Return on Assets (ROA) by examining the annual reports of the
selected companies. Descriptive, correlation and multiple regression analyses are applied to inspect the
data. The study finds that there is a significant positive relationship between the quality of AIS and
financial performance. Moreover, there is a significant impact of system flexibility, system
sophistication, and effectiveness of the system towards financial performance; whilst system control also
effect on financial performance, but the result is insignificant. Overall, the findings in this study are
supported by other studies in the literature. The study provides a deeper understanding of how system
flexibility, system sophistication, effectiveness of the system and system control of AIS quality relate to
financial performance. It is recommended to maintain the highest levels of quality of AIS as it will be an
advantage to raise the monetary performance of listed companies in Sri Lanka.
