Integrating Financial Accounting and Corporate Finance: A Theoretical Framework for Value Creation and Risk Optimization

Abstract

Financial accounting and corporate finance are complementary mechanisms for value creation and risk optimization because both domains influence how firms measure performance, allocate capital, manage financing choices, and control financial risk. The article argues that accounting information is not merely a reporting output but a strategic input that supports investment, financing, dividends, liquidity, and risk-management decisions. Using a quantitative explanatory design, the proposed framework examines the effects of financial accounting information quality and corporate finance decisions on firm value, financial performance, and risk outcomes. Accounting information quality is conceptualized through accrual quality, earnings persistence, disclosure quality, audit quality, and reporting timeliness, while corporate finance decisions are represented by investment efficiency, leverage, dividend policy, and working capital management. Value creation is measured through indicators such as return on assets, return on equity, Tobin’s Q, and market-to-book ratio, whereas risk optimization is assessed through financial stability, liquidity, leverage, earnings volatility, and distress-risk indicators. The results support the view that high-quality accounting information improves corporate finance decision-making, enhances firm value, and strengthens risk optimization. Corporate finance decisions also partially mediate the relationship between accounting quality and value creation. Sustainable firm value, therefore, depends on the effective integration of reliable accounting information with strategic financial decision-making and risk governance.