Department of Accounting and Finance
URI for this collectionhttps://rps.wku.edu.et/handle/123456789/45801
Department of Accounting and Finance
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Item THE EFFECT OF BOARD DIRECTORS COMPOSITIONS PRACTICES ON FINNANCIAL INNOVATION ON ETHIOPIAN COMMERCIAL BANKS(WOLKITE UNIVERSITY, 2021-11) MUSLIHA MUSTEFA UMEROne of the many challenges the business world is facing currently is installing sound and proper board directors composition in an organization. This might lead to economic failure if not managed and addressed properly and timely. This study aims at evaluating the effect of board director’s compositions practices on financial innovation on Ethiopian commercial banks using five years data from the year 2016 to 2020. The study assessed the effect of corporate governance variables on financial innovation of Ethiopian commercial banks as measured by natural logarithm of e- banking products and services. To achieve the objectives of the study the researcher used descriptive research design. The Corporate governance variables used in this study were females representing in the board, educational qualification of board of directors, board size, audit committee size and board meeting frequency. In the study firm size and bank age were used as control variables. Mixed research approach was employed to understand the effect of corporate governance on financial innovation on Ethiopian commercial banks. The study uses both primary and secondary source of data. Primary data was collected through interview of board secretaries of Ethiopian commercial banks used in this study. The study used panel data and pooled regression model to analyze the relationship between corporate governance mechanisms and financial innovation using a data set of 15 Ethiopian commercial banks. The findings showed that, females representing in the board and educational qualification of board directors have positive and significant effect on financial innovation of the banks. On the other hand, audit committee size and board directors meeting had negative and significant effect on financial innovation of the banks. Based on the findings of the study, it can be concluded that female’s directors in the board, educational qualification of board of directors, audit committee size and board directors meeting frequency influence financial innovation of Ethiopian commercial banks. Thus, the study recommends commercial banks should improve their board director’s educational qualification by providing the chance to upgrade their academic status and increases the size of female’s board directors to enhance financial innovation in the banks.Item THE EFFECT OF WORKING CAPITAL MANAGEMENT ON FIRM‟S PROFITABLITY: EVIDENCE FROM SELECTED MANUFACTURING COMPANIES IN ADDIS ABABA ETHIOPIA.(WOLKITE UNIVERSITY, 2021-11) ABDULAZIZ BEREDAThe main purpose of this study was to determine empirically the impact of working capital management on profitability. To indicate relationship between these two, the author collected secondary data from 19 manufacturing companies in Addis Ababa, Ethiopia for the period of 2015 to 2019. Inventory holding period, Accounts receivable period and accounts payable period are used as independent working capital policy variables. However, cash conversion cycle (CCC) and current assets to total assets ratio are used as comprehensive measures of working capital investment policy. On the other hand, current liabilities to total assets ratio is used as measure of working capital financing policy. The regression results show inverse relationship between inventory holding periods and accounts receivable with profitability. However there is statistically insignificant relationship between accounts payable period and profitability. The results also show that there exists significant negative relationship between profitability of the sampled firms and cash Conversion cycle (CCC). In hence to that there is significant positive relationship between current assets to total assets ratio and profitability measures has been observed. The other hand, results show that a significant positive relationship between current liabilities to total assets ratio and profitability. To be profitable, firms must try to keep these numbers of days account receivable and inventory turnover days to minimum level. This also helps to minimal the cash conversion cycle (CCC). Since aggressiveness of working capital management investment policies is inversely related to profitability, and aggressive investment policy positively related with profitability, the financial managers of manufacturing Companies should follow conservative investment policy and aggressive financing policy in their working capital management in manufacturing companies. Data and Data Collection to gather the necessary data copies of audited financial statements in the form of income statement and statement of financial position over the period of five years has been use. The population of study will comprised 19 manufacturing share companies in Addis Ababa Ethiopia. The E – views-9 software has been used to analyse financial data and Researcher used panel Least Squares methods for analysis.Item FACTORS AFFECTING EFFECTIVENESS OF INTERNAL AUDIT FUNCTION: THE CASE OF SELECTED ETHIOPIAN BUDGETARY PUBLIC SECTORS(WOLKITE UNIVERSITY, 2018-06) SOLOMON OLUMAThis study explores the factors affecting effectiveness of internal audit function in selected Ethiopian budgetary public sectors. The thesis has identified and analyzed the important variables and addressed major research questions raised under each specific objective, andtested hypotheses regarding effectiveness of the internal audit function in those selected public-sector offices. Convenience sampling technique was used to select 18 Ethiopian budget arypublic sectors (ten Federal ministries and eight public universities) out of total 55. A total of 72 respondents were selected through purposive sampling for finance, audit director, auditors and accountants to fill the self-administered questionnaire. Four respondents per office were picked from 18 offices. Using Likeret-Scale type that shows respondents’ agreement or disagreement by constructing into five point scale, 69 respondents that correctly completed and returned thequestionnaire formed the actual sample size for the study. Multi regression model was used indata analysis and test of hypothesis. The study found out that competence of IA, and independence of IA were statistically positive and significant at (p<0.01) whereas, quality ofIA wa statistically positive and significant at (p<0.05) among the explained variablesindicating strong association between these independent variables and the dependent variable i.eIA effectiveness. Based on the key findings, the study recommends that the internal auditorshould have maximum independence from the organization they work for, need to collectively possess or develop their knowledge or skills through appropriate professional training. Also, a similar study with a wider scope should be carried along with a study to identify the drivers of effectiveness of internal audit in public sector institutions in the future.Item THE EFFECT OF CAPITAL STRUCTURE ON FIRM PROFITABILITY (The case of Ethiopian commercial banks)(wolkite universty, 2025-05) MELAKU MULUThis study was aimed to investigate the effect of capital structure on firms‘ profitability with special emphasis on Ethiopian commercial banks Firms using panel data of nine consecutive years (2014 E.C-2022 E.C). The secondary data sources (audited financial statements) have been collected from the randomly selected nine Ethiopian commercial banks firms in Ethiopia. Linear regression model has been employed to analyze the relationship between firms‘ profitability and capital structure. The study employed EView8 software and panel data methodologies, particularly the Random Effect model for regression analysis. The researcher tested the CLRM assumptions error of zero mean, normality, heteroskedasticity, autocorrelation, and multicollinearity—on the data prior to the regression analysis. The study used two dependent variables ROA and ROE; three independent variables such as debt to asset ratio, debt to equity ratio and interest coverage ratio, two control variables size and tangibility and macroeconomic factor inflation. The regression result showed that variables DTAR, IC, TAN, FIRM SIZE and INF have positive and statistically significant effect on ROA at 1%, 1%, 5%, 5% and 1% significant level respectively. Whereas; DTER have negative and statistically significant effect on ROA at 1% significant level. In addition to all independent variables DTAR, IC, FIRM SIZE, TAN and INF have positive and statistically significant effect on ROE have at 1%, 1%, 5%, 1% and 5% significant level respectivelyThe research concluded that capital structure has a significant effect on the profitability of Ethiopian commercial banks in Ethiopia. Finally the recommendations have been forwarded for commercial banks, management, regulatory body, policy makers and future study on the subject.Key Words: Capital structure, profitability, commercial banks in Ethiopia.Item DETERMINANTS OF BUDGET EFFECTIVINESS IN GURAGUE ZONE OFFICE OF FINANCEAND ECONOMIC DEVELOPMENT(WOLKITE UNIVERSITY, 2024-04) TIBEBU FREWMung bean (Vigna radiata L.), is a recently introduced grain legume crop with high potential uses and export demand. However poor crop management practices, including improper NPSB fertilization rate and absence of improved varieties contributed to low productivity in the study area. Hence a field experiment was conducted in Cheha district, Gurage Zone to evaluate the effect of blended NPSB fertilizer rates on the yield and yield components of mung bean varieties. The experiment was laid out in a randomized complete block design with three replications. There were 16 treatment combinations, comprising two mung bean varieties (NVL-1 and Rasa) and eight blended NPSB fertilizer rates (0, 25, 50, 75,100, 125, 150 and 175 kg ha-1). The results showed that the highest values for most growth parameters and yield components were obtained with the application of 175 kg ha-1 NPSB. Results from the main effect of NPSB fertilizer rates indicated that the highest values for plant height (75.83), total number of branches (8.43), total number of nodules (22.91 and 22.6), number of effective nodules (13.41and 13.01) hundred seed weight (35.5g) and above ground dry biomass (5606.3 kg ha-1) were obtained. The interaction between variety and NPSB rate significantly influenced several growth and yield traits. The combination of Rasa variety with 175 kg ha-1 NPSB resulted in the highest days to 50% flowering (55.66 days),days to 90%physiological maturity (88.33 days), number of pod per plant (31), number of seed per pod(13.91), grain yield (1403.33 kg ha-1) and harvest index (24.97%).The partial budget analysis indicated that the combination of rasa variety with 175 kg ha1 NPSB gave the highest net benefit (48,928 Birr ha-1) with 1113.2% marginal rate of return. Therefore, the use of 175 kg ha-1 NPSB fertilizer with Rasa variety are recommended for optimal mung bean yield and economic benefit in the study area and similar agro ecology. These findings provide valuable insights for farmers and researchers to enhance mung bean production and address yield limitations in Ethiopia. However, since the result is only on one season and one location, further research is recommended to be carried out across more seasons and locations.Item THE EFFECT OF ELECTRONIC BANKING ON FINANCIAL PERFORMANCE EVIDENCE FROM SELECTED COMMERCIAL BANKS IN ETHIOPIA(WOLKITE UNIVERSITY, 2024-06) TESHOME BEKELE MEREZUThis paper investigates the effect of electronic banking on the financial performance of commercial banks in Ethiopia. The study aims to analyze how the adoption of electronic banking channels, including Automated Teller Machines (ATM), Point of Sale (POS) terminals, mobile banking, and Internet banking, influences banks' profitability and return on equity (ROE). Panel data regression models with a period ofeight years, from 2015 to 2023 were employed to examine the relationship between electronicbanking transaction volumes and financial performance indicators, controlling for bank size. The findings reveal significant associations between certain electronic banking channels and financial performance metrics. Specifically, higher transaction volumes through ATM channels are positivelycorrelated with both return on assets (ROA) and ROE. Conversely, increased usage of POS terminals exhibits a negative impact on ROA, suggesting potential challenges associated with POS transactions. Mobile banking and Internet banking transaction volumes demonstrate positive relationships with ROE, underscoring the importance of these channels in enhancing banks' profitability and shareholder value. Furthermore, the study identifies bank size as a significant determinant of financial performance, with larger banks exhibiting higher profitability. Based on these findings, recommendations are provided for Ethiopian banks to strategically leverage electronic banking channels to improve their financial performance. These recommendations include investing in technological infrastructure, enhancing cybersecurity measures, and tailoring electronic banking services to meet the diverse needs of customers. Overall, this study contributes to the growing body of literature on electronic banking and provides valuable insights for policymakers, bank executives, and researchers interested in the Ethiopian banking sector.Item DETERMINANTS OF INTERNAL AUDIT EFFECTIVENESS IN GURAGE ZONE PUBLIC SECTORS, WOLKITE, ETHIOPIA(WOLKITE UNIVERSITY, 2024-04) TAMIRU SUFA BIRKETAThe main intention of this study was identifying the determinants of internal audit effectiveness in GURAGE zone public sectors offices. The researcher gathered data from primary sources. The primary data has been collected by distributing five point Likert scale questioner to the sampled respondent. The study has been conducted by taking purposive sample and the questionnaires were collected from 80managers, development planning officers, ethics and anti-corruption officers, government finance purchasing and property management department officers and theinternal auditor of purposively selected public sectors offices. To attain the objective of the study descriptive and explanatory research design and qualitative research approach was considered. The correlation and multiple linier regression data analysis part were done by using SPSS version 29 and also OLS was used to test the null hypothesis. The demographic variables were analyzed through descriptive statistics tools. To investigate the effect of independent variables on internal audit effectiveness, correlation and regression analysis were used. Additionally, the finding of this study is to indicate the direct relation effects of internal audit independency, auditor’s proficiency, management support, information technology, approved Internal Audit Charter, effective internal control system and performance measurement of internal audit workwith the internal audit effectiveness within the public sector offices. The regression output showsthat each one independent variable: competency of internal auditors, Information technology, and performance measurement of internal audit work were positively related with and contributed significantly for the interior audit effectiveness. This study is vital for both academicians and managers because it helps to advance the understanding of things determining internal audit effectiveness and may accustom solve the sensible problems facing the inner audit within the public sector offices.Item DETERMINANTS OF FINANCIAL REPORTING QUALITY IN CASE OF INSURANCE COMPANY IN THIOPIA(WOLKITE UNIVERSITY, 2024-05) SEYOUM YILMAThis study intends to assess the determinants of financial reporting quality in case of insurance company in Ethiopia over a period of 2014-2022. Consequently, the study used document review of insurances’ audited financial statements. The explanatory variables used in this study were Leverage (LE), Profitability (ROA), Liquidity (LQ), Auditor Change(AC), Firm Age (FA) and Firm Size(FS).In this study sixteen Insurance companies were selected from a total population of sixteen insurances companies to accomplish a study for the period of nine years (2014-2022) with the total of 144 observations. Moreover, The secondary data were analyzed using descriptive statistics, correlation analysis and panel data analysis and data from document reviews were interpreted quantitatively. The study used panel data and random regression model to analyze the Determinants of Financial Reporting quality of Ethiopian insurance companies. The study found that profitability ratio has positive and insignificant effect on financial reporting quality. While, auditor changes and firm ages had significant effect on financial reporting quality, leverage and liquidity were found to be insignificant effect on financial reporting quality of Ethiopian insurance companies.Item THE EFFECT OF FINANCIAL INNOVATION ON PROFITABLITY OF ETHIOPIAN COMMERCIAL BANKS(WOLKITE UNIVERSITY, 2024-05) SELAM TADEMUFinancial innovation is considered to be a critical requirement for the growth and profitability of organizations. It enhances technological provisions, product constituents, integrated software and consumer friendly as well as incorporating additional 1 useful features. The aim of this study was to examine the effect of financial innovations on profitability of commercial banks in Ethiopia. The researcher used exploratory research design and quantitative research approach was used. The independent variables were mobile banking user, internet banking user, agent banking, ATM machine, pos machine and dependent variable was profitability. Beside these, in the study firm size and bank age were used as control variables. The study uses only secondary source of data. The pooled regression model was used to analyze the relationship between financial innovation and profitability. Agent banking; age of the firm and bank size has positive and significant effect on return on equity while, ATM and posm has negative statistically significant effect on ROE. Only mobile banking has positive and significant effect on ROA while other has negative and significant effect on ROA except mobile banking. Moreover, pos and mobile banking has positive and significant effect on profitability that were measured in NIM while the remaining other variables has negative and significant effect on profitability (NIM). From the study, it can be concluded that investment and asset in pos machine terminal has negative and statistically significant impact on ROE and ROA. The asset of pos machine terminal has positive and significant impact on net interest margin. The asset of mobile banking increase profitability (NIM). From the findings it can be conclude that, the investment on internet banking has Positive effect on banks performance that was measured by ROE. The greater investment on ATMs deployment has negative effect on banks profitability and investment on deploying ATMS lead to increase banks performance.Item FACTORS AFFECTING THE QUALITY OF EXTERNAL AUDIT SERVICE: EVIDENCE FROM PRIVATE AUDIT FIRMS OF ETHIOPIA(WOLKITE UNIVERSITY, 2024-04) SEADA MOHAMMEDThis research delves into the determinants influencing external audit quality in Ethiopian private audit firms, concentrating on five pivotal dimensions of auditors' professional ethics :independence, competence, objectivity, integrity, and confidentiality of information. The study ,encompassing 120 private audit firms, adopts a mixed research methodology and employs ordinal logistic regression to analyze the intricate relationships between these ethical dimensions and the perceived Quality The researcher was employed a quantitative research method which allows gathering numerical data, measuring variables, predicting and using statistical procedures. To determine the relationship among the variables and to test the research hypothesis correlation and regression analysis method was used by meeting the ordinary least square (OLS) assumptions of the linear regression. The correlation analysis revealed significant positive associations between auditor competence, integrity, objectivity, confidentiality of information, and the overall external audit quality. The model's robust fit, within 88.4% explanation of variability in external audit quality, underscored the effectiveness of the selected determinants in predicting audit outcomes. Multiple linear regression analysis identifies competence and integrity as substantial predictors of external audit quality, supported by robust methodology as indicated by high R-square values and adherence to assumptions. In conclusion, this research highlights the crucial roles of auditor competence and integrity in external audit quality in Ethiopian private audit firms. While auditor independence showed no significant correlation, the study emphasizes context-specific factors. It offers valuable insights and practical recommendations for improving audit practices. Implementing these can enhance audit quality and the integrity of the profession in Ethiopia. The study recommended targeted improvements in auditor competence and integrity to enhance overall external audit quality in Ethiopia. Acknowledging limitations such as a focused scope and methodological constraints,6the research underscores the need for cautious interpretation of results while offering valuable sights for the improvement of auditing practices in the Ethiopian private sector. Keywords :Audit, Quality, Factor, Private firms