INFLUENCE OF ACCOUNTING INFORMATION SYSTEM ON FINANCIAL PERFORMANCE OF TEA MANUFACTURING COMPANIES IN KENYA - CASE OF MUDETE TEA FACTORY

Abstract

The main objective of this study was to evaluate the influence of the accounting information system on the financial performance of tea manufacturing firms in Kenya, a case study of Mudete Tea Factory. The specific objectives were; to examine the influence of accounting information recording on financial performance, and to determine the influence of financial reporting on the financial performance of tea manufacturing firms in Kenya. The study was carried out in Mudete Tea Factory. The study was guided by a technology acceptance model. The study used a case study research design. The study employed a census sampling technique where all the target population was used in the study. Primary data was collected by the use of questionnaires, while secondary data from the firm’s audited financial statements for previous financial years. The reliability of the research instruments was tested through Cronbach’s Alpha. Validity was tested through expert analysis of the questionnaires. The data was analyzed through inferential statistics. Inferential statistics were represented through regression analysis and correlation analysis to determine the quality of the relationship between the dependent and independent variables. The findings of the study were presented using tables. The study showed that there exists a positive and significant relationship between the components of AIS and firm’s financial performance with an average R2 of 0.508. The study results also indicated that accounting information recording and financial reporting have a positive and significant effect on the financial performance of tea factories in Kenya. The research recommended that tea manufacturing firms should ensure they use accounting information systems in their daily activities which results in improved financial performance.JEL: M10; M41; O14  Article visualizations: