Accounting Information Resilience and Economic Decision-Making Extending the Entropy–Resilience Framework to Markets, Capital Allocation, and Economic Shocks
Year: 2026
Type: preprint
Abstract: Accounting information is not economically valuable merely because it is produced; its value ultimately depends on how effectively economic agents can use it to make decisions. Existing accounting research has established important relationships between financial reporting quality, disclosure, information asymmetry, liquidity, cost of capital, and market outcomes. However, relatively little theoretical attention has been devoted to the dynamic capacity of accounting information systems to preserve decision-useful information when economic conditions become severely disrupted. This paper extends the Accounting Information Entropy–Resilience Theory (AIERT) into the economic decision-making domain. It develops a theoretical framework in which accounting information resilience influences economic decisions through four interconnected channels: information precision, information asymmetry, processing costs, and decision confidence. The framework proposes that economic shocks can increase accounting information entropy, which in turn reduces the reliability and usability of information available to investors, creditors, managers, and other capital-market participants. Accounting information resilience can partially offset these effects by preserving information quality, accelerating information recovery, reducing uncertainty, and improving the stability of economic expectations. The paper develops a dynamic model linking accounting information entropy and resilience to market liquidity, cost of capital, investment efficiency, capital allocation, and economic decision quality. It further proposes nonlinear and threshold effects, suggesting that informational deterioration may remain economically manageable at low levels of disruption but become disproportionately consequential after critical thresholds are crossed. The framework also introduces the concept of economic decision resilience, defined as the capacity of economic agents to maintain rational and information-sensitive decisions despite disturbances in the accounting information environment. Seven theoretical propositions are developed. The paper argues that accounting information resilience should be viewed not only as an accounting-quality attribute but as an economically consequential organizational capability. The framework generates testable predictions for future empirical research and establishes a theoretical bridge between accounting information quality, information economics, financial markets, and capital allocation
Author: Karimi Baghmaleki, Majid
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W7221080306