Accounting Information Entropy, Resilience, and Economic Transmission: A Theory of Market and Capital-Allocation Responses to Information Shocks
Year: 2026
Type: preprint
Abstract: Accounting information constitutes a critical informational infrastructure through which economic agents coordinate expectations, evaluate firms, allocate capital, and respond to uncertainty. Existing accounting research has extensively examined information quality, disclosure, information asymmetry, and capital-market consequences, but comparatively less attention has been devoted to the dynamic transmission of accounting information disturbances across interconnected economic agents. This paper develops a theoretical framework for understanding how accounting information shocks generate entropy, how that entropy propagates through economic networks, and how accounting information resilience moderates the magnitude, speed, and persistence of economic transmission. Building on the Accounting Information Entropy–Resilience Theory (AIERT), the paper conceptualizes accounting information entropy as a state variable representing informational disorder generated by uncertainty, inconsistency, ambiguity, reporting disruption, and reduced information precision. The framework proposes that information shocks can propagate through ownership, financing, supply-chain, investment, and market networks. Accounting information resilience acts as a stabilizing capacity by limiting shock amplification, accelerating information recovery, and reducing the persistence of economically relevant uncertainty. The paper develops a dynamic transmission model in which an initial accounting information disturbance produces changes in entropy, information frictions, expectations, financing conditions, asset prices, and capital allocation. It introduces the concepts of informational shock amplification, entropy persistence, resilience-adjusted transmission, and economic transmission elasticity. The framework further predicts nonlinear propagation, threshold effects, asymmetric recovery, and network-dependent contagion. A comprehensive empirical research architecture is proposed using panel models, event studies, network models, spatial specifications, differencein-differences designs, dynamic panel estimators, and quasi-experimental identification strategies. The paper contributes to accounting and economics by extending the analysis of accounting information from firm-level quality toward dynamic economic transmission. It argues that the economic importance of accounting information depends not only on its accuracy or relevance but also on its ability to prevent, absorb, and recover from informational shocks that propagate through interconnected economic systems.
Author: Karimi Baghmaleki, Majid
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W7221111523