Cloud-Based Accounting and Firm Performance: A Liquidity-Focused Analysis of British and French firms

Abstract

This study investigates the impact of cloud accounting technology (CAT) adoption on the liquidity performance of French and British firms from 2015 to 2021. Using a dataset of 721 firm-year observations from survey responses and Orbis financial data, liquidity is measured with the current ratio and cash-to-assets ratio. A quantitative, deductive, and positivist approach is used, employing multiple regression models with controls for firm size, age, leverage, asset composition, profitability, and industry. Results indicate that CAT adoption is significantly associated with higher cash-to-assets ratios but lower current ratios, suggesting that adopters manage working capital more efficiently by prioritising cash over other current assets. Subsample analysis reveals no significant liquidity effect for loss making firms, whereas profitable firms show higher cash holdings and lower current ratios following CAT adoption, reflecting strategic liquidity optimisation. The findings contribute to the literature by focusing specifically on liquidity metrics rather than general financial performance, highlighting CAT’s role as an enabling technology most effective under healthy financial conditions. This has implications for managers, policymakers, and service providers aiming to promote digital adoption in accounting.