The Influence of Accounting System Effectiveness on Stakeholders’ Trust in Libyan Banks

Abstract

This study attempts to check whether banks’ accounting systems have an effect on stakeholders’ trust in Libya. To achieve this objective, the quantitative research design was adopted. 49 questionnaires had been distributed to banks’ stakeholder including employees, managers, and investors to assess their perceptions on the effectiveness of accounting systems and stakeholder confidence. The accounting system effectiveness measured in this study using four of its aspects, namely, the system’s accuracy, internal controls, transparency, and technological adoption. Whereas the stakeholders’ trust was measured using three of its determinants, namely, transparency, reliability, and confidence in decision-making. Results indicate a significant positive impact of the level of accounting system’s effectiveness on the level of stakeholders’ trust. A bank possessing a transparent and well-designed accounting system is expected to boost stakeholders’ trust. This finding highlights the importance of implementing robust accounting systems for banks’ management to build stakeholders’ confidence.