The Importance of Financial Information in Managerial Decision-Making in Small-Sized Companies
Nazari, Fereshteh (2025)
2025
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2025120833521
https://urn.fi/URN:NBN:fi:amk-2025120833521
Tiivistelmä
This thesis examines the important role of financial information quality in supporting managerial decision-making in SMEs. A qualitative case study supported by document analysis was used, a qualitative case study approach to a selected small company in the United Arab Emirates, Dubai.
The theoretical framework of this thesis is based on decision theory, challenges of decision-making in SMEs, and qualitative characteristics of financial information. This framework integrates modern decision theory with accounting principles and emphasizes how the qualitative characteristics of financial information, including relevance, faithfulness, timeliness, verifiability, and comparability, affect the quality of managerial decisions. This framework shows how access to accurate and reliable financial data reduces uncertainty in decision-making, supports rational decision-making by managers, and improves company performance, which is vital for SMEs that face resource limitations.
Data was collected through financial statement review, supporting documents analysis, interviews with internal stakeholders, and external financial experts. The findings reveal that the commissioning company has weaknesses in documentation, accounting policies, accounts classification, and communication.
The result demonstrates that a manager can use financial information more effectively in their decision-making process when reports are summarized, clear, and easy to understand. Therefore, improving managers’ financial knowledge, enhancing internal reporting, and increasing the quality of financial information can significantly support managers in their decision-making process. The study concludes that high-quality financial information as a strategic tool improves the quality of managerial decisions and strengthens the company’s credibility and transparency with external stakeholders. Future research is recommended to explore the important role of financial literacy in managerial decision-making in a group of SMEs in different sectors.
The theoretical framework of this thesis is based on decision theory, challenges of decision-making in SMEs, and qualitative characteristics of financial information. This framework integrates modern decision theory with accounting principles and emphasizes how the qualitative characteristics of financial information, including relevance, faithfulness, timeliness, verifiability, and comparability, affect the quality of managerial decisions. This framework shows how access to accurate and reliable financial data reduces uncertainty in decision-making, supports rational decision-making by managers, and improves company performance, which is vital for SMEs that face resource limitations.
Data was collected through financial statement review, supporting documents analysis, interviews with internal stakeholders, and external financial experts. The findings reveal that the commissioning company has weaknesses in documentation, accounting policies, accounts classification, and communication.
The result demonstrates that a manager can use financial information more effectively in their decision-making process when reports are summarized, clear, and easy to understand. Therefore, improving managers’ financial knowledge, enhancing internal reporting, and increasing the quality of financial information can significantly support managers in their decision-making process. The study concludes that high-quality financial information as a strategic tool improves the quality of managerial decisions and strengthens the company’s credibility and transparency with external stakeholders. Future research is recommended to explore the important role of financial literacy in managerial decision-making in a group of SMEs in different sectors.