This experiment examines the effects of financial reporting bases (GAAP and income tax) and service levels offered by external accountants (audits and reviews) on loan officers. The effects are measured using a loan approval decision and four perceptions: (1) appropriate interest premium, (2) likelihood of default, (3) confidence in the financial report, and (4) usefulness of the financial report. Analysis of variance techniques are used to ascertain the effects of accounting reports on the perceptions of loan officers; legit model development is used to isolate the effects on loan approval decisions. Reviews result in higher interest premiums than audits. Loan officers also associate higher default risks with reviews and tax-basis financial reports. Loan officers are most confident with audited GAAP-basis financial reports and least confident with audited income tax basis financial reports. In addition, loan officers indicate that GAAP-basis financial reports are more useful than income-tax-basis financial reports. Neither reporting basis nor service level affected their loan-approval decisions, however. Confirmatory and exploratory factor analyses are used to develop surrogates for decision usefulness using Statement of Financial Accounting Concepts (SFAC) Number 2. The most dependable surrogate for decision usefulness developed involves two characteristics that SFAC Number 2 suggests as being nonessential to accounting information: certainty and precision. The reporting basis affected this surrogate and decision usefulness itself in the same manner; in both cases, GAAP-basis financial reports are more useful than tax-basis financial reports. Managers, accountants, and loan officers should be aware that using income-tax-basis financial reports can detrimentally affect loan officer perceptions of default risk, confidence, and decision usefulness. Further, using a review rather than an audit may affect loan officer perceptions of confidence and interest rates. Future research could introduce additional independent variables. These variables include the effects of a statement of changes in financial position, financial ratios, industries, or differential reporting. Research using qualitative characteristics of accounting information could lead to strong measures of decision usefulness that would be beneficial in ascertaining effects on loan-officer perceptions and decisions. / Ph. D.