Purpose This study examines how digital technology adoption affects financial reporting quality (FRQ) in a fragile socio-economic context and investigates the mediating role of the entrepreneurial ecosystem. Grounded in institutional theory, it explores whether digital transformation can function as a governance-enabling mechanism in a conflict-affected emerging economy. Design/methodology/approach Using panel data from all eight insurance companies listed on the Palestine Exchange (2019–2023; 40 firm-year observations), the study applies partial least squares structural equation modeling (PLS-SEM). Digital technology (including big data, artificial intelligence, and blockchain) is modeled as a formative construct, while FRQ is measured multidimensionally (accuracy, consistency, transparency, and timeliness). Effect sizes (f2) and predictive relevance (Q2) are assessed to strengthen analytical rigor. Findings Digital technology adoption significantly enhances financial reporting quality. The entrepreneurial ecosystem partially mediates this relationship, indicating that ecosystem embeddedness strengthens the governance benefits of digitalization. The model demonstrates satisfactory explanatory and predictive capability. Research limitations/implications The small sample size and use of binary indicators limit generalizability. However, the findings extend institutional theory by identifying ecosystem maturity as a boundary condition shaping digital governance outcomes in fragile markets. Practical implications Policymakers should align digitalization strategies with ecosystem-strengthening reforms to improve transparency and market stability. Social implications Enhanced reporting quality contributes to investor confidence and socio-economic resilience in conflict-affected environments. Originality/value This study is among the first to integrate institutional theory and entrepreneurial ecosystem perspectives to explain how digital transformation improves financial reporting quality in a conflict-affected economy, offering a context-sensitive model linking digital adoption, ecosystem embeddedness, and socio-economic development.
Awad et al. (Mon,) studied this question.