The Effect of Voluntary Disclosures by Companies Listed the Nairobi Securities Exchange on the Investors’ Confidence

Abstract

The dynamics investing today has led to a situation where investors are more skeptical on where they are investing. They are constantly in need of more information before they make the ultimate final decision that they would like to invest in a certain organization and not the other. One way of increasing the level of confidence is through disclosure of additional information by organizations other than what is required by law. The study strives to answer the question as to the effect that voluntary disclosure has on the level of investor confidence and specifically on firms that are trading their shares on the securities exchange. The study used descriptive analysis to analyze the information that was collected through primary and secondary sources. A score was determined to establish the level of disclosure that organizations are making and a Likert scale was used to determine the level of investor confidence. Regression analysis was used to show how the movement in the level of disclosure impacted the level of confidence in the investors. The outcome of the research indicates that when the voluntary disclosure are higher is high, the investors tend to be more confident and are willing to invest in such organizations. The study, therefore, recommends that organizations need to keep increasing the amount of information that they are giving to investors to ensure that they do not lose on prospective clients. The study, however, cautions that organizations should be careful about the information they disclose to avoid legal repercussions as well as the related costs.