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Effect of quality of accounting information on strategic decision making
1. UNIVERSITY OF BUEA
FACULTY OF SOCIALAND MANAGEMENT SCIENCE
DEPARTMENT OF ECONOMICS
THE EFFECT OF THE QUALITY OF ACCOUNTING INFORMATION
ON STRATEGIC DECISION MAKING IN SONARA-LIMBE
PRESENTED BY
ANNETTE NAMONDO EWUSI
SM19P215
SUPERVISOR
DR. MBU SUNDAY AGBOR
MAY, 2023
2. CONTENT
INTRODUCTION
RESEARCH PROBLEM
RESEARCH QUESTIONS, OBJECTIVES AND HYPOTHESES
LITERATURE REVIEW
RESEARCH METHODOLOGY
PRESENTATION AND INTERPRETATION OF RESULTS
DISCUSSION OF RESULTS, CONCLUSION AND RECOMMENDATIONS
3. Introduction
• The existence of successful and efficient management of the company is inconceivable
without adequate information, having in mind that we live in an era of high information
technology expansion and when the communication as a modern tool of information
exchange is highly developed. For a company, on a daily basis different kind of
information are needed: information from the field of finance and accounting,
quantitative and qualitative, technical and technological information, and many other
business and non-business information.
• In order to serve its purpose, after information are collected, they are processed,
classified and stored within the company. For effective and efficient information
processing it is necessary to have an integrated set of components, called an information
system (Trimisiu Tunji, 2012).
4. Problem Statement
• Management is constantly confronted with the problem of alternative decision-making,
especially knowing that resources are relatively scarce and limited. This necessitates
doing the right things, the appropriate use of resources and the need to set different things
in the order of importance. However, as we live in an age of data abundance. Business
managers have today access to far more data than any previous generation of managers,
and that is transforming the way many business decisions are made.
• The catastrophic fire that occurred on May 31, 2019, had a significant impact on
SONARA's refining activities. The loss of four units of the production line, including the
main distillation unit, caused a stoppage of refining activities and affected the company's
ability to ensure its solvency and liquidity with regards to its commercial, financial, and
State partners. As a result, the government decided to take measures for the restructuring
of the company's debt owed to both local banks and international traders that supply
petroleum products to Cameroon.
5. Cont’d
• To support the national refinery company (SONARA), an escrow account has been opened at
BEAC, and a subsidy of XAF47.88 per liter of petroleum products sold is deposited into that
account. Additionally, a fixed margin of XAF16 and a guaranteed 80% market share were
dedicated to Sonara, allowing it to have sufficient margins to refund its debts. However, this has
led to SONARA taking a new phase from its original mission of treating crude oil and supplying
refined petroleum products to the national market to importing refined petroleum products from
foreign suppliers and selling to the local market as well as its other CEMAC clients.
• Currently, SONARA faces a critical challenge in making strategic decisions on financing,
investment, and dividend, which requires a vast amount of information. Key decision-makers
and managers in SONARA need quality information to make good strategic decisions for the
benefit of the company, its various stakeholders, and the nation at large. One of the primary
sources of this information is the internal data obtained from the company's accounting
information system.
• However, if the quality of this information is subpar and the management fails to rely on quality
accounting information, it could lead to poor strategic decision-making, which may deepen the
crisis faced by SONARA. Therefore, it is crucial for SONARA to ensure that its accounting
information system provides accurate and reliable information to support its decision-making.
6. 1.3 Research Questions
1.3.1 Main Research Question
what is the effect of the quality of accounting information on the strategic decision-making
in SONARA?
1.3.2 Specific Research Question
• To what extent does consistency of accounting information affect strategic decision-
making in SONARA?
• What is the effect of reliability of accounting information on strategic decision-making in
SONARA?
• How does the relevance of accounting information affect the strategic decision-making in
SONARA?
7. 1.4 Objectives of the Study
1.4.1 Main Objective
To examine the effect of the quality of accounting information on the strategic decision-
making in SONARA.
1.4.2 Specific Objectives
• To determine the effect of consistency of accounting information on the strategic
decision-making in SONARA;
• To assess the effect of reliability of accounting information on the strategic decision-
making in SONARA;
• To investigate the influence of the relevance of accounting information on the strategic
decision-making in SONARA.
.
8. 1.5 Hypotheses of the Study
• H01: Consistency of accounting information has no significant effect on the strategic
decision in SONARA
• H02: Reliability of accounting information has no significant effect on the strategic
decision in SONARA.
• H03: Relevance of accounting information does not have significant effect on the
strategic decision in SONARA.
9. 2. LITERATURE REVIEW
2.1 Conceptual Framework
Relevance of Accounting Information
Strategic Decision
Making
Reliability of Accounting Information
Figure 1: Authors conception; framework of the effect of the Quality of Accounting Information on
strategic Decision Making in SONARA-Limbe
Consistency of Accounting Information
11. METHODOLOGY
STUDY TYPE QUANTITATIVE STUDY
RESEARCH DESIGN (INDEX DESIGN) CROSS – SECTIONAL (SURVEY DESIGN)
POPULATION OF THE STUDY STAFF OF THE DEPARTMENT OF FINANCE
AND ACCOUNTING, DEPARTMENT OF
INTERNAL AUDIT, DEPARTMENT OF GENERAL
AFFAIRS AND MANAGEMENT
SAMPLE SIZE 61
INSTRUMENT OF DATA COLLECTION QUESTIONNAIRE
METHOD OF DATAANALYSIS QUANTITATIVE ANALYSIS (OLS
REGRESSION ANALYSIS)
SAMPLING METHOD STRATIFIED SAMPLING TECHNIQUE
NATURE OF DATA PRIMARY DATA
RELIABILITY OF THE INSTRUMENT CRONBACH ALPHA TEST
VALIDATION OF RESULTS ECONOMETRIC AND STATISTICAL TEST
13. 3.3 EXPECTED RESULTS
• β1> 0 showing there exist a positive relationship between reliability of accounting
information and strategic decision making in SONARA
• β2> 0 showing there exist a positive relationship between relevance of accounting
information and strategic decision making in SONARA
• β3> 0 showing there exist a positive relationship between consistency of accounting
information and strategic decision making in SONARA
14. PRESENTATION AND DISCUSSION OF RESULTS
4.1.1 Descriptive Presentation of Respondents
Source: Author (2023); IBM SPSS Statistics
Descriptive Statistics
N Minimum Maximum Mean Std. Deviation
consistency of accounting information 61 2.00 4.75 4.0663 0.57452
Reliability of accounting information 61 2.00 5.00 3.6737 0.84257
Relevance of accounting information 61 2.75 5.00 4.0150 0.57570
Strategic decision making 61 1.00 5.00 3.9710 1.12984
Valid N (listwise) 61
15. 4.1.2 Reliability Test
Source: Author (2023); IBM SPSS Statistics
Variable Cronbach’s alpha
reliability of accounting information 0.716
relevance of accounting information 0.771
consistency of accounting information 0.729
strategic decision making 0.711
16. 4.1.3 Analysis of correlation between variables
Source: Author (2023); IBM SPSS Statistics
Correlations
consistency of accounting
information
Reliability of accounting
information
Relevance of accounting
information Strategic decision making
consistency of accounting information Pearson Correlation 1 -.074 .045 -.239**
Sig. (2-tailed) .299 .523 .001
N 61 61 61 61
Reliability of accounting information Pearson Correlation -.074 1 .185** -.461**
Sig. (2-tailed) .299 .009 .000
N 61 61 61 61
Relevance of accounting information Pearson Correlation .045 .185** 1 -.222**
Sig. (2-tailed) .523 .009 .002
N 61 61 61 61
Strategic decision making Pearson Correlation -.239** -.461** -.222** 1
Sig. (2-tailed) .001 .000 .002
N 61 61 61 61
**. Correlation is significant at the 0.01 level (2-tailed).
17. 4.1.4 Presentation of Regression Results, Goodness of Fit and Overall Significance of the Model
Source: Author (2023); IBM SPSS Statistics
Variable Coefficient Standard
Error
t-
statistics
P > /t/
Consistency of accounting
Information
0.526 0.118 4.465 0.000
Reliability of accounting Information 0.614 0.082 7.520 0.000
Relevance of accounting Information 0.646 0.119 5.063 0.004
Diagnostic tests
R2 0.803
Adjusted R2 0.822
F-statistics 28.415
Prob > F 0.0000
18. Statistical Test
• Objective 1: To determine the effects of consistency of accounting Information
on strategic decision making in SONARA. Statistical test performed shows that
consistency of accounting information positively and significantly affects strategic decision making
in SONARA which is not in line with our null hypothesis.
• Objective 2: To ascertain the effects of reliability of accounting Information on
strategic decision making in SONARA. Statistical test performed shows that reliability
of accounting information positively and significantly affects strategic decision making in
SONARA which is not in line with our null hypothesis.
• Objective 3: To examine the effects of relevance of accounting Information on
strategic decision making in SONARA. Statistical test performed shows that relevance
of accounting information positively and significantly affects strategic decision making in
SONARA which is not in line with our null hypothesis.
19. CONCLUSIONS AND RECOMMENDATIONS
• Conclusion
From the study findings, one can conclude that accounting information consistency as a characteristic depended on
whether the methods used are consistent from one accounting period to the other. Further, consistency of accounting
information in SONARA had adequate consistency characteristics and consistency was a key determinant of decision
making in SONARA.
It can also be concluded that accounting information reliability characteristics on accounting information used by
management in decision making in SONARA was verifiable, financial information was faithfully represented, the
information had predictive value, neutrality and had an element of completeness. It can further be concluded that
financial accounting information in SONARA was characterized by reliability and this reliability was a key predictor of
decision making in SONARA.
Finally, it can be concluded that accounting information relevance in SONARA was timely and there was feedback
value associated with financial accounting information.
20. Recommendations
• Firstly, consistency of accounting information significantly affected strategic decision-making in SONARA.
Therefore, management must put in measures to guarantee the consistency of the accounting methods used such that
financial statements in SONARA are easily comparable over time
• Secondly, reliability of accounting information significantly affects strategic decision-making process in
SONARA. Therefore, we recommend that management must also put in measures to enhance reliability in accounting
information so as to improve predictive value which aids in decision making in the future.
• Thirdly, relevance of accounting information significantly affects strategic decision-making in SONARA.
Therefore, we recommend that the management of SONARA should strive to ensure that information generated from
accounting systems displays an element of completeness so that this helps in decision-making in the organization.
21. Suggestions for Future Studies
The researcher suggests that another study on financial accounting quality and
decision making be conducted in another company like Société Nationale des
Hydrocarbures (SNH), to find out whether the findings will be consistent. Another
study can also be done in the private sector to assess if there will be similar or
conflicting findings with explanations for the same being investigated.