The governance of blockchain technology in real-time financial reporting

Meera, A/P Eeswaran (2024) The governance of blockchain technology in real-time financial reporting. Doctoral thesis, Sunway University.

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Abstract

This research delves into the application of Blockchain Technology (BT) in enhancing governance and accountability within Real-time Financial Reporting. Recognised as a pivotal innovation, BT revolutionises diverse sectors by offering robust, transparent, and decentralised solutions, particularly in enhancing internal control systems. This study specifically investigates BT's role in bolstering emerging financial trends such as decentralised finance (DeFi), non-fungible tokens (NFTs), and its synergy with advanced technologies like artificial intelligence (AI) and the Internet of Things (IoT) in the realm of financial reporting. Central to this investigation is the exploration of how BT can be harnessed as a singular, adaptable information source in a multi-stakeholder environment, facilitating immediate data interpretation for decision-making processes. Additionally, the study examines the governance mechanisms within BT networks in the accounting and finance domains and the evolving roles of Stakeholders of Financial Reporting (SFR). The research objectives are twofold: firstly, to understand the accountability and governance complexities involved in employing BT for Real-time Financial Reporting and secondly, to understand how BT's consensus-based verification trait contributes to the flexibility and reliability of information in real-time financial reporting. These objectives are explored through the perspectives of various SFR regarding the use of BT in Real-time Financial Reporting. Employing a phenomenological approach, the study gathers insights through one-to-one interviews with stakeholders in the financial reporting process, selected using a snowballing technique, ensuring the data's relevance, reliability, and validity. The responses are transcribed verbatim and subjected to thematic analysis using NVivo Version 12 identifying and interpreting patterns within the data to address the research questions and summarise key insights. Innovation Diffusion Theory (IDT) was used to interpret the responses of the interviewees, based on the key concepts of the theory. The key findings of this study interpret the stakeholders’ views and level of readiness (the evaluation stage) of utilising on the Blockchain Technology, which is crucial in ensuring decentralised decision-making processes and maintaining the security, stability, and integrity of the network, ultimately fostering trust in Real-time Financial Reporting among users and stakeholders. It also enables active participation in shaping the direction of Blockchain development, ensuring alignment with regulatory requirements, and fostering innovation and governance and scalability in utilising the consensus-based verification trait is vital as it mitigates the risk of fraud, manipulation, and unauthorised changes to the ledger, ensuring the integrity and immutability of the data stored on the Blockchain. The practical implications of this research are significant, offering valuable insights for accounting and finance professionals on the potential transformative impact of BT on financial reporting processes and the challenges related to governance and accountability and achieving flexible and single source information (immediacy) involved in its widespread adoption. The conceptual framework analyses Blockchain Technology for Real-time Financial Reporting. It weighs the benefits (transparency, accountability, competitive edge) against challenges (verification, governance, cost) to inform industry decisions on Blockchain Technology adoption and implementation strategies. The study concludes that the governance and accountability issues in Real-time Financial Reporting with Blockchain Technology are lack of guidance, global standards, insufficient use cases in the accounting industry and lack of regulation on the use of the technology. The Blockchain trait consensus-based verification achieves real-time flexibility and single source information by providing authorised, verified, transparent and unalterable information in the process towards preparing and issuing a financial report.

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