Accounting Information Entropy–Resilience Theory: A Dynamic Theory of Accounting Information Quality Under Economic Shocks
Year: 2026
Type: preprint
Abstract: Accounting information has traditionally been evaluated through relatively static concepts such as relevance, faithful representation, earnings quality, disclosure quality, information asymmetry, and value relevance. These perspectives have generated substantial advances in accounting research, yet they provide limited theoretical explanation of how the informational properties of accounting systems evolve when firms encounter economic disturbances. This paper develops the Accounting Information Entropy–Resilience Theory (AIERT), a dynamic theoretical framework in which accounting information quality is conceptualized as a changing informational state rather than a fixed firm characteristic. The theory introduces two central constructs: Accounting Information Entropy, representing the degree of uncertainty, disorder, ambiguity, inconsistency, and informational instability contained in an accounting information environment; and Accounting Information Resilience, representing the capacity of that environment to resist, absorb, adapt to, and recover from disturbances while preserving economically useful information. The framework integrates information theory, accounting information economics, organizational resilience, dynamic capabilities, market microstructure, and economic decision theory. AIERT proposes that economic shocks can increase accounting information entropy, that entropy can exhibit persistence and nonlinear escalation, and that resilience determines the extent to which informational deterioration is absorbed or transmitted into economic decisions. The theory introduces resistance, recovery speed, recovery completeness, entropy persistence, critical entropy thresholds, hysteresis, informational equilibrium, and shock-amplification mechanisms. A dynamic state-space representation is developed to formalize these relationships. The paper advances seven theoretical propositions concerning shock sensitivity, resilience, nonlinear entropy dynamics, threshold behavior, recovery asymmetry, hysteresis, and economic consequences. It further distinguishes accounting information quality from accounting information resilience and argues that a high-quality information system in normal conditions may nevertheless exhibit low resilience under severe disturbance. The paper concludes by developing an empirical research agenda capable of testing AIERT and by outlining implications for accounting research, standard setting, auditing, corporate governance, investors, and economic policy.
Author: Karimi Baghmaleki, Majid
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W7220687238