Bridging the trust gap in financial reporting: the impact of blockchain technology and smart contracts

Abstract

Purpose

This study aims to examine the role of blockchain technology (BCT) in trust in financial reporting (TFR) and the use of smart contracts (USC). It aims to ascertain the mediating role of USC in the relationship between BCT and TFR, thereby contributing to the limited empirical literature in this domain.

Design/methodology/approach

Based on a sample of the accountants’ familiarity with BCT, a structural equation model was constructed and analyzed using AMOS 24. The model proposes and tests relationships between BCT, USC and TFR.

Findings

The study highlights BCT’s significant positive influence on TFR, with USC mediating this effect. It provides empirical evidence that supports the transformative potential of BCT and USC in enhancing TFR.

Practical implications

These findings have significant implications for practitioners, regulatory bodies and policymakers. By highlighting the effectiveness of BCT and USC in fostering TFR, the study makes one aware of strategies to mitigate financial malpractices. It promotes the adoption of BCT in accounting practices.

Originality/value

This study addresses a gap in the literature by investigating the complex interplay of BCT, USC and TFR. It offers a unique perspective by exploring the mediating role of USC, thereby enhancing our understanding of the mechanisms through which BCT can foster TFR.

Citation

Rawashdeh, A. (2024), "Bridging the trust gap in financial reporting: the impact of blockchain technology and smart contracts", Journal of Financial Reporting and Accounting, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JFRA-08-2023-0494