Impact of financial statements information on the decision-making effectiveness of selected entities in Liberia

Abstract

Financial statements contain information that reveals the health and current condition, and the future prospect of an organization. It is a medium of communication to users of the financial activities of the entity. Information is key to decision making. Therefore, financial statements containing the financial information of an entity are useful for economic decision making. For a financial statement to be of use to the users, it must be of the right quality and the users should have the requisite level of understanding of the statements. A decision that is based on quality information can bring about confidence, satisfaction, and commitment. Knowledge drives away doubt and fear to build confidence, satisfaction and commitment. The purpose of this study was to examine the extent to which entities within the Liberia field of the West African Union Mission of Seventh-day Adventists use information from financial statements in making financial decision, and the effect of the use and quality of the information, as well as the level of knowledge of the users on the effectiveness of decision-making. The study employed a cross-sectional causal research design to accomplish its purpose. The findings show that executive committees use financial statements but superficially, and that knowledge is of more impact on the decision-making effectiveness than quality. This study recommends that persons of knowledgeable financial background be purposefully part of the board to facilitate financial decision making.