Determinants of Compliance With International Financial Reporting Standards by Firms Listed at the Nairobi Securities Exchange

Abstract

In the past decades, (IFRS) have gained popularity around the globe as the standard ways of financial reporting. Almost over 150 nations around the world apply IFRS in their presentation of financial information. The question that always arises is, do these firms promptly follow the set standards. The research assessed the determinants of compliance with IFRS by firms quoted at NSE using a descriptive research design. The study population composed 64 firms listed at NSE as at 31 December 2016 thus the study undertook a census approach. This research collected data for five years from 2012 to 2016. The regression method was preferred to analyze as well as determine the effects of each of the independent variables. The results revealed that correlation linking firm size and the disclosure index of the firms listed at the NSE was negative and significant but the relationship between profitability and the disclosure index of the listed firms was negative and insignificant. The findings also revealed that the relationship between leverage and the disclosure index of the listed firms was positive and insignificant but the relationship between the disclosure index and age of the firm listed at NSE was positive and significant. The study concluded that the key determinants of compliance with IFRS by firms quoted at the Nairobi securities exchange are firm size and firm age. The study recommended that listed firms should ensure that they comply with international financial reporting standards to ensure that their financial reports are relevant, faithfully presented, comparable and understandable.