Effect of Financial Accounting Information Quality on Decision Making: a Survey of Public Benefit Organizations in Nairobi County, Kenya

Abstract

Accounting information is necessary to understand financial situation of the firm and used as the basis of decision making. The purpose of this research was to study the effect of financial accounting information quality decision making on public benefit organizations in public benefit organizations in Nairobi County. The researcher used a survey research design to study financial accounting information quality and its relationship with decision making in public benefit organizations in Nairobi County. For the purpose of this study the study population consisted of all 8503 registered public benefit organizations working in Nairobi County. The sample size of the study was 200 public benefit organizations who constituted 2% from each stratum. There was collection of primary data from the respondents using self-administered questionnaires. Descriptive statistics (mean and standard deviation) and inferential (multiple regression analysis) were used to analyze the data. Results indicated that comparability, reliability and relevance were important in determining decision making in public benefit organizations in Nairobi County. Correlation results indicated that the association between all the predictor variables; comparability, reliability & relevance and decision making was strong and positive and was statistically significant. Regression results also show that there is a positive relationship between all the predictor variables; comparability, reliability & relevance and decision making. It can be concluded that financial accounting information in public benefit organizations in Nairobi County had adequate comparability reliability and relevance characteristics and they were key determinants of decision making in PBOs in Nairobi County. From the study findings, the researcher recommends that the management puts in measures to improve both quantitative and qualitative characteristics of financial statements in their PBO so that they are easily comparable to those industry average. 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.