Fire arrows can:
- Improve the armour piercing chances for most archers (I have not tested those archers which have armour piercing per se though, e.g. Longbowmen).
- Decrease the accuracy during DAYTIME BATTLES
- Increase the accuracy during NIGHT BATTLES (to be sure about this, if archers start a battle with flaming arrows on, it means it improves their accuracy).
- Increase reloading time
- Have a negative impact on the attacked unit morale (if you kill one single soldier, then the morale of the entire unit is affected).

Cheers.