Abstract
Sound financial decisions rely on timely, accurate, and relevant information. Accounting theory provides the conceptual and methodological basis for producing such information, thereby influencing decisions on investment, management, credit, and regulation. This paper reviews conceptual, theoretical, and empirical studies to explore how accounting theory shapes these decisions, with emphasis on emerging-market contexts such as Nigeria. The findings indicate that the theoretical principles of accounting, through measurement bases and qualitative characteristics, strengthen accountability, transparency, and comparability, which in turn improve capital allocation and risk evaluation. Nonetheless, several limitations remain, including managerial opportunism, behavioural biases, inadequate enforcement, and reporting complexity. The paper therefore advocates integrating behavioural and contextual perspectives, enhancing institutional oversight, and upgrading accounting education to strengthen the relationship between theory and practice.
Keywords: Accounting Theory, Financial Decision-Making, Transparency, Emerging Economies, Regulatory Compliance