Digital Transformation and Financial Management Effectiveness: The Mediating Role of Accounting Information Quality and the Moderating Effect of Digital Finance

Abstract

This study develops and tests an integrated model examining the association between digital transformation and financial management effectiveness, with accounting information quality as a mediating mechanism and digital finance as a boundary condition. The model responds to the practical observation that investments in enterprise systems, cloud platforms, analytics, automation, and digitally connected financial services do not automatically translate into better budgeting, working-capital control, cost management, risk oversight, or financial decision quality. A quantitative, cross-sectional survey design was used to examine manufacturing small and medium-sized enterprises in the Yangtze River Delta, China. The analytical sample comprised 412 valid responses measured with 21 five-point Likert items. Partial least squares structural equation modelling was used to assess internal-consistency reliability, convergent validity, HTMT and Fornell-Larcker discriminant validity, bootstrapped direct and indirect effects, interaction effects, effect sizes, and cross-validated predictive relevance. Digital transformation was positively associated with financial management effectiveness (β = .284, p < .001) and accounting information quality (β = .646, p < .001). Accounting information quality was positively associated with financial management effectiveness (β = .553, p < .001) and carried a significant indirect association between digital transformation and financial management effectiveness (β = .358, 95% CI [.299, .420]). The positive association between digital transformation and financial management effectiveness was stronger at higher levels of digital finance, as indicated by the positive interaction term (β = .137, p < .001). The model explained 41.8% of accounting information quality and 67.7% of financial management effectiveness, with positive predictive relevance. The study integrates digital transformation, accounting information quality, digital finance, and financial management effectiveness in a quantitative mediation-and-moderation model. The findings indicate that digital capability is associated with stronger financial management principally when it supports decision-useful accounting information and when firms complement internal digital processes with integrated payments, financing, treasury, and credit-analytics services.