Download this Paper Open PDF in Browser

The Effect of ERP System Implementations on the Usefulness of Accounting Information

37 Pages Posted: 4 Oct 2005  

Joseph F. Brazel

North Carolina State University - Poole College of Management - Department of Accounting

Li Dang

Oregon State University - Department of Accounting, Finance, and Information Management

Date Written: October 2005

Abstract

ERP systems have become the system of choice for the majority of publicly traded companies and have radically changed the way accounting information is processed, analyzed, audited, and disseminated. In this study, we examine whether ERP system implementations have impacted the decision usefulness of accounting information. We find that ERP adoptions lead to a trade-off between increased information relevancy and decreased information reliability for external users of financial statements. After implementing the system, firms concurrently experience both a decrease in reporting lag and an increase in the level of discretionary accruals. Contrary to expectations, adopting more ERP modules did not augment these effects. These results should be of interest to financial statement preparers initially adopting or implementing new versions of ERP applications, auditors serving clients with ERP systems, and regulators overseeing the financial markets and consolidation in the ERP industry.

Keywords: ERP systems, discretionary accruals, implementation, reporting lag

JEL Classification: M41, M43, M49

Suggested Citation

Brazel, Joseph F. and Dang, Li, The Effect of ERP System Implementations on the Usefulness of Accounting Information (October 2005). Available at SSRN: https://ssrn.com/abstract=815190 or http://dx.doi.org/10.2139/ssrn.815190

Joseph F. Brazel (Contact Author)

North Carolina State University - Poole College of Management - Department of Accounting ( email )

Campus Box 8113
Nelson Hall
Raleigh, NC 27695
United States
919-513-1772 (Phone)

Li Dang

Oregon State University - Department of Accounting, Finance, and Information Management ( email )

Corvallis, OR 97331
United States

Paper statistics

Downloads
4,851
Rank
1,227
Abstract Views
13,602