FIRM SIZE, LEVERAGE AND PROFITABILITY: OVERRIDING IMPACT OF ACCOUNTING INFORMATION SYSTEM

Information systems are mainly used by many organizations to improve efficiency of business activities by automatingexisting operations. Past researches in show that by adopting information systems we can increase firm performance. Results discovered that by adopting accounting information system there is significant improvement in performance. Accounting information system (AIS) is a superior system that focuses on user-orientation. Core objective of AIS is to collect and record data and information that is concerned to events that can economically impact upon firms. It processes information and communicate this useful information to internal and external stakeholders. This study intends to find the effects of Accounting Information system (AIS) on profitability of Pakistani firms. It investigates whether there is any difference between adopters and non adopters of accounting system. The sample data have been taken from sixty six of public listed companies on Karachi Stock Exchange (KSE) by purposive sampling dated from 2005 to 2009 period. Study used the four variables. Independent variable is ROA which measures profitability. Two independent variables are Leverage and Firm Size. Leverage is quantified using debt ratio and firm size is measured by taking natural logarithm of total assets. These independent variables are taken on the basis of high availability as determinants of profitability. Study intends to check the overridingrole of accounting system on this relation, so AS acts as intervening variable in the study.