This study investigates the impact of financial soundness on the profitability of listed commercial banks in Nigeria, with a focus on the determinants of return on assets (ROA). Specifically, the influence of capital adequacy ratio (CAR), operational efficiency (OPE), and non-performing loan ratio (NPLR) on bank profitability was assessed. Additionally, the moderating effect of OPE on the relationship between capital adequacy and ROA was examined. An ex-post facto research design was adopted, utilising secondary data spanning a ten-year period from 2014 to 2023. Data were extracted from the annual reports of the sampled banks and subjected to rigorous descriptive and inferential analyses. Measures of central tendency and dispersion were employed to summarise the data, while hypotheses were tested using ordinary least squares (OLS) regression analysis. The results indicate that CAR exerts a significant positive effect on ROA, suggesting that banks with robust capital buffers are better positioned to absorb financial shocks and sustain income-generating activities. Conversely, OPE was found to have a significant negative effect on ROA, implying that efficiency gains may not automatically translate into higher profitability in the context of Nigerian commercial banks. Similarly, the NPLR exhibited a significant negative relationship with ROA, highlighting the detrimental effect of asset quality deterioration on profitability. The interaction between capital adequacy and OPE was also observed to negatively affect ROA, indicating that excessive OPE without commensurate capital support may undermine profitability. These findings underscore the necessity of a balanced approach to financial soundness, where adequate capitalisation is maintained alongside prudent operational management. It is therefore recommended that management of Nigerian commercial banks maintain capital levels above regulatory minima to reinforce resilience and income-generating capacity, while strategically enhancing OPE to optimise profitability. The study contributes to the literature by providing empirical evidence on the complex interplay between financial soundness indicators and bank profitability, offering actionable insights for policymakers, regulators, and banking executives seeking to strengthen the stability and performance of the sector.
An integrated framework for combining normal costing with activity-based costing (ABC) is developed and demonstrated to address persistent limitations in conventional cost accounting practices. Although normal costing remains widely adopted due to its operational simplicity and alignment with financial reporting, its reliance on broad overhead allocation bases has been shown to impair cost accuracy in complex production environments. Conversely, ABC offers superior causal attribution of indirect costs but is often perceived as difficult to integrate into routine costing systems. To reconcile these approaches, a structured integration methodology is proposed and illustrated through an applied case based on the machining department of an automobile parts manufacturer. Using a controlled hypothetical dataset to ensure analytical transparency, unit product costs are first determined under the traditional costing system using both full costing and normal costing approaches. Subsequently, the same cost structures are recalculated within an ABC framework, again under both full costing and normal costing assumptions, allowing systematic comparison across costing logics. The results demonstrate that integrating ABC with normal costing enhances cost precision without sacrificing the operational advantages of normal costing, particularly in departments characterized by high overhead intensity and activity heterogeneity. It is further shown that the integrated approach mitigates cost distortion arising from volume-based allocation while preserving consistency with standard cost-setting practices. From a methodological perspective, the study advances existing literature by explicitly operationalizing the coexistence of ABC and normal costing rather than treating them as mutually exclusive systems. Practical implications are highlighted for manufacturing enterprises seeking incremental adoption of ABC principles within established accounting infrastructures. In addition, the necessity of enterprise resource planning (ERP) systems is emphasized, as reliable integration depends on high-resolution activity data and automated cost tracing capabilities. The proposed framework and application procedure are expected to provide accounting practitioners and researchers with a replicable pathway for implementing integrated costing systems that balance analytical accuracy with managerial feasibility.
Islamic finance, grounded in Shariah principles derived from the Al-Quran and Sunnah, promotes risk sharing, ethical conduct, and financial stability, thereby shaping economic outcomes in countries where Islamic financial institutions are systemically important. Among the various components of Islamic finance, Islamic banking constitutes the dominant segment and plays a central role in channeling capital across borders. Given the increasing globalization of Islamic financial markets, the relationship between Islamic financial development and foreign direct investment (FDI) outflows warrants rigorous empirical examination. This study investigates the impact of Islamic banks and key Islamic financial instruments—namely Sukuk and Takaful—on foreign direct investment outflows (FDI-Out) in leading Islamic finance economies, including Oman, the United Arab Emirates, Qatar, Nigeria, Malaysia, Indonesia, Saudi Arabia, Bahrain, and Kuwait. Balanced panel data are analyzed using the ordinary least squares estimation technique implemented in Stata 18, with Islamic banks’ profitability incorporated as both an explanatory and moderating variable. The empirical findings reveal three robust results. First, a statistically significant negative association is observed between Islamic banks’ profitability and FDI-Out, suggesting that higher domestic profitability may incentivize capital retention rather than outward investment. Second, Sukuk issuance is found to exert a direct negative effect on FDI-Out, whereas Takaful penetration exhibits a positive relationship, indicating heterogeneous effects across Islamic financial instruments. Third, when Islamic banks’ profitability is introduced as a moderating factor, Sukuk demonstrates a positive and significant impact on FDI-Out, implying that profitable Islamic banking systems enhance the outward investment channel of Sukuk markets. These findings highlight the complementary roles of Islamic banking performance and capital market instruments in shaping cross-border investment behavior. Overall, the results suggest that a well-integrated Islamic financial system can influence the direction and scale of international capital flows, with important implications for policymakers seeking to balance domestic investment, financial stability, and outward economic expansion in Shariah-compliant financial environments.
This study aims (i) to assess the prevalence of Earnings Management among non-financial Maltese Listed Entities; (ii) to explore the underlying motivations and drivers that give rise to such practices; and (iii) to investigate the methods and techniques currently employed by the auditee or auditor to prevent or detect Earnings Management within Maltese Listed Entities. A sequential two-phase explanatory mixed-methods approach was employed: first, the accrual-based model was applied to assess the presence of Earnings Management, followed by 20 semi-structured interviews with Audit Partners and Chief Financial Officers. While Earnings Management sector-specific behaviours were observed, no statistically significant differences in the distribution of Earnings Management across sectors were found, suggesting overall consistency. Despite its presence, Earnings Management remains ambiguous, with diverse interpretations creating opportunities for exploitation. The principles-based nature of IFRS facilitates Earnings Management, allowing subjective judgment to serve managerial interests. Motivations for the practice include company-level capital pressures and contractual obligations, with auditors seen as key deterrents owing to their commitment to professional standards. While current preventative measures are effective, the study calls for stronger scrutiny of management and auditors. It also highlights opportunities for local regulatory bodies to enhance consistency and depth in their approach to addressing complex Earnings Management techniques. Lastly, External Auditors face challenges such as quality gaps between Big 4 and non-Big 4 firms, and client resistance during efforts to detect Earnings Management. The study has sought to understand the Earnings Management phenomenon within the Maltese context, given its negative implications on Financial Reporting.
This study investigated the impact of financial inclusion, driven by digital financial platforms, on economic growth in Ghana between 2000 and 2023. Using secondary data from the World Development Indicators, the analysis applied Nonlinear Autoregressive Distributed Lag (NARDL) and Quantile ARDL (QARDL) models to capture both asymmetric and distributional dynamics. Existing literature affirmed the positive role of financial inclusion in development, but it often assumed linear and homogeneous effects and overlooked potential asymmetries. Despite global advances, financial exclusion remains acute in sub-Saharan Africa, where weak infrastructure, institutional inefficiencies, and structural barriers constrain access to finance. The results revealed that improvements in financial inclusion significantly enhanced economic growth by expanding savings, credit access, and productive investments, while reductions in inclusion undermined growth by restricting capital mobilisation and weakening financial intermediation. These findings highlighted the dual role of financial inclusion as both a growth enabler and a potential constraint when exclusion persists. Policy recommendations include expanding digital financial infrastructure in rural and marginalised communities, strengthening regulatory frameworks to enhance consumer protection and trust, and broadening financial literacy programmes to ensure effective utilisation of financial services. By integrating nonlinear and quantile-specific estimations, this study contributes new evidence to the fragile yet transformative role of digital finance in the development trajectory of Ghana.
The incorporation of environmental, social and governance (ESG) activities into business strategies has become a predominant way to maintain business sustainability. The impact of ESG adoption on financial reporting outcomes has been a subject of interest to authors in recent years. Nevertheless, studies that discussed and synthesized relevant theories and concepts in this domain are lacking in the literature to date. To fill this gap, this study adopted a narrative review approach to examining ESG and financial reporting outcomes (FROs), with an aim to identify and synthetize FROs that have been proposed and associated with a firm’s ESG activities. In addition, this paper commented on the state and development of knowledge in the field of ESG and FRO as well as the limitations of prior research. Although the incorporation of ESG activities into business strategies produces positive FRO outcomes such as enhanced accounting quality, improved performance of a firm, and decreased cost of equity capital and debts, inconsistent propositions still remain. The findings presented in this study are unresolved, leading to ongoing inquiry and the need for further research. The review has implications for investors and policymakers to consider whether ESG could be used as a tool to potentially improve the credibility of financial reports and the outcomes of a firm’s operational activities.
The digital transformation of professional sectors requires a systematic renewal of processes, and the accounting profession is no exception. In Sub-Saharan Africa (SSA), active engagement with digital transformation is critical for accounting professionals, who must adapt to meet emerging demands in a rapidly evolving digital landscape. This transformation entails not only technological upgrades but also a shift in the societal perception of the accounting profession, driven by enhanced operational efficiency, data security, and transparency facilitated by digital systems. However, significant challenges hinder the seamless integration of digital technologies in accounting practices across the region. These include concerns regarding ethics, inadequate digital infrastructure, high implementation costs, cybersecurity threats, and a skills gap among professionals, compounded by institutional resistance to change. Nevertheless, the digital transformation offers substantial opportunities to enhance efficiency, accountability, and transparency in accounting operations. AI technologies, for instance, can automate repetitive tasks, enabling accountants to focus on more strategic, advisory roles. The potential for digital innovation also extends to fostering collaboration among stakeholders, including government bodies, which could play a pivotal role in creating the necessary infrastructure and policy frameworks to support digital transformation. Furthermore, partnerships between industry and academia are essential for the development of curricula that address the evolving needs of the profession. In light of these considerations, it is essential that efforts are made to overcome existing barriers, while leveraging digital transformation to foster a more efficient, transparent, and resilient accounting profession across SSA.
State-Owned Enterprises (SOEs) are essential for economic development but frequently suffer from endemic corruption and financial mismanagement, particularly in developing economies where traditional auditing mechanisms fail to detect complex financial crimes. This study investigated the primary determinants of fraudulent financial reporting by empirically validating the Fraud Hexagon Theory within the distinct institutional context of Zimbabwe. Adopting a quantitative causal-comparative research design, the study utilized multiple linear regression to examine the influence of six governance indicators and analyzed data from 38 SOEs listed on the Zimbabwe Stock Exchange between 2015 and 2024. The results demonstrated that the model explained 67.5% of the variance in fraudulent reporting, hence confirming the holistic applicability of the Fraud Hexagon Theory. Crucially, external financial pressure stemming from unsustainable debt emerged as the strongest predictor of fraud, followed significantly by collusion in government projects and executive ego. Furthermore, the findings revealed that while frequent change of directors degraded institutional memory and increased the risk of fraud, mandatory rotation of auditors acted as a significant deterrent. It was concluded that financial fraud in Zimbabwean SOEs was not merely an individual behavioral issue but a systemic outcome of unfunded government mandates and state capture. These findings suggested that safeguarding public resources necessitated a strategic shift from routine compliance to targeted forensic auditing, alongside the strict enforcement of meritocratic board appointments and transparency in the procurement process.
This study investigates the perceptions of internal auditors regarding the effectiveness of Artificial Intelligence (AI) in detecting fraudulent activities and strengthening internal control systems within public universities in Ghana. While AI is being increasingly integrated into audit practices globally, its application and perceived impact in public sector institutions, particularly in developing countries, remain underexplored. Ghanaian public universities, facing resource constraints, bureaucratic inefficiencies, and weaknesses in audit frameworks, present a compelling context for examining AI’s role in improving governance and transparency. A mixed-methods approach was employed, combining survey data from 176 internal auditors with qualitative insights from six audit leaders. The Technology Acceptance Model (TAM) and Agency Theory were applied to analyze the perceived usefulness (PU) of AI and its potential to mitigate information asymmetry. Results reveal that internal auditors generally regard AI as highly effective in enhancing fraud detection, particularly in terms of real-time anomaly identification, increasing accuracy, and reducing false positives. AI’s contribution to strengthening internal control mechanisms was also recognized, though challenges related to limited technical training, suboptimal integration of audit and IT systems, and underutilization of advanced AI tools were identified. The study highlights the need for focused auditor training, improved inter-departmental collaboration, and institutional policies that foster AI adoption. These findings contribute to the growing body of literature on the role of AI in public sector auditing, particularly in Sub-Saharan Africa. By integrating quantitative and qualitative data, the study offers a comprehensive analysis of AI’s perceived effectiveness in addressing governance challenges in Ghana’s higher education sector, filling a significant gap in existing research.
The objectives of this study are to (i) ascertain the major quantitative and qualitative factors influencing the determination of materiality thresholds in the private sector external audits performed by large and medium-sized Maltese audit firms, (ii) assess the effectiveness of ISA 320 in the determination of such materiality thresholds, as well as the impact of introducing more prescriptive guidelines within the Standard, and (iii) assess the current level of professional judgement and its effectiveness in determining materiality thresholds, as well as ascertain the typical challenges involved in exercising such judgement. A predominantly qualitative mixed-methods approach was adopted. Semi-structured interviews were carried out with twelve audit partners from large and medium-sized Maltese audit firms. The findings indicated that the major quantitative factors influencing overall materiality were 5–10% of profit before tax and 1–3% of total revenue. The major quantitative factor influencing performance materiality and the clearly trivial threshold was 75% and 5% of overall materiality, respectively. Additionally, the major qualitative factors influencing materiality thresholds were fraud and litigation risk, quality of client internal controls, auditor critical thinking skills, client complexity, the client’s sector and a change in auditor. Furthermore, the findings indicated that ISA 320 provided sufficient guidance for determining materiality thresholds. Moreover, the most cited benefit of introducing more prescriptive guidelines within the Standard was greater consistency among auditors, while the most cited drawback was the limitation on professional judgement. The findings also revealed that professional judgement was crucial and generally effective in determining materiality thresholds. However, auditors typically faced a few challenges when exercising such judgement, of which time pressure and the setting of appropriate thresholds are particularly significant.
This case study evaluated the effectiveness of performance measurement framework (PMF) in elevating operational efficiency, with a primary focus on Simbisa Brands, the largest chain in Zimbabwe. The research on the fast food industry in this developing country investigated how the Balanced Scorecard (BSC) could be integrated to monitor the key performance indicators (KPIs) of an organization, in respect of financial performance, customer satisfaction, internal processes, and employee training. Using a mixed method approach, structured questionnaires were distributed to employees, and interviews were conducted with key employees and stakeholders at Simbisa Brands. Results indicated that while the PMF of Simbisa aligned with its strategic objectives, significant challenges and obstacles to operational effectiveness existed in data quality, employee engagement, and customer satisfaction. Moreover, the unstable economic environment in Zimbabwe further complicated financial reporting and cost management. The BSC framework, which aligned KPIs with strategic goals, could effectively track financial performance and customer loyalty in the industry to boost operational excellence and support sustainable growth. Recommendations to stakeholders were proposed to continuously improve data quality, enhance employee involvement, and refine performance metrics to deliver the best purchasing experiences. For Simbisa Brands and other similar organizations, this research offered valuable insights to assist them in gaining competitive advantages and long-term success in the face of challenging business environments.
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