EFFECT OF ACCOUNTING INFORMATION ON MANAGEMENT DECISIONS

Abstract

Accounting information is very important as it helps comprehend the financial situation of the firm. It is also used as the basis of decision making. The aim of this research was to study the effect of accounting information on management decisions. Accounting information is essential in decision making but problem lies in the validity and sufficiency of the information. The researcher used survey research design to the relationship between accounting information and management decisions. For the purpose of the study, the population consisted of twenty-one (21) companies in the consumer goods sector. The sample size of the study was the management stratum of four consumer goods companies which constituted 10% of the population. Primary data were collected from respondents using self-administered questionnaires. Descriptive statistics (mean and standard deviation) and inferential (multiple regression analysis) were used to analyze the data. The descriptive statistics provides a summary statistics of variables. Consequently, results of the regression analysis revealed that the three variables have positive relationship with accounting information; effective accounting information to financing decisions (p-value=0.000), accounting information to investment decisions (p-value=0.000) and financial accounting information to dividend decisions (p-value=0.000). Correlation results indicated that the association between all the predictor variables; accounting information and the various management decisions were strong and positive and was statistically significant. Regression results also show that there is a positive relationship between all the predictor variables; accounting information and the various management decisions. It can be concluded that accounting information is a key determinant of decision making in most consumer goods companies. From the study findings, the researcher recommends that there should be a clear methodology designed on how decisions should be undertaken in an attempt to address any concern in the organization. Another study can also be done in other to assess if there will be similar or conflicting findings with explanations for the same being investigated.