Nexus between Robo-Advisory Services and Financial Statement Quality for Investment Advisory and Portfolio Management
Keywords:
Robo-advisory services, financial statement quality, financial technology, earnings management, investment advisory, portfolio managementAbstract
This study examined the nexus between robo-advisory services and financial statement quality, with a view to determining which financial technology enhances the reliability, transparency, and credibility of corporate financial reporting. The study employed a quantitative research design using panel data collected from selected firms over a specified period. Data were analyzed using descriptive statistics, correlation analysis, panel regression (fixed and random effects), Hausman test, Granger causality test, and error correction model, alongside relevant diagnostic and robustness checks. The results revealed that robo-advisory services have a positive and statistically significant effect on financial statement quality, indicating that the adoption of automated financial technologies improves reporting accuracy and reduces earnings manipulation. The findings also showed that firm size and audit quality positively influence financial statement quality, while leverage has a negative effect, suggesting that highly leveraged firms are more prone to financial reporting distortions. The Hausman test supported the use of the fixed effects model, while the co-integration and error correction results confirmed both long-run and short-run relationships among the variables. Granger causality results further indicated a directional relationship between robo-advisory adoption and financial reporting quality. The study concludes that robo-advisory services are a critical driver of improved financial statement quality, enhancing transparency, accountability, and investor confidence. It recommends increased adoption of financial technologies, stronger regulatory frameworks, and continuous capacity building for financial professionals. The study contributes to the growing body of literature on financial technology by providing empirical evidence on its role in improving financial reporting quality, particularly in emerging economies.
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