Effect of Financial reporting quality on performance of companies listed at the Nairobi Securities Exchange
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Date
2020Author
Anyango, Esther, O
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
Companies with better quality of financial information are associated with subsequent
higher performance in the literature. Currently, the many accounting scandals and
financial crises that happened in numerous distinguished firms have undermined
investors ‘trust concerning the financial reports and have introduced several criticisms
about financial reporting quality (FRQ). Generally, Accountants are aware of the
limitations of the information contained in the financial reports and have thus attempted
to address this shortcoming by enhancing the scope of the generally accepted accounting
principles and financial reporting standards. This study thus sought to ascertain the effect
of financial reporting quality on financial performance of companies listed at the Nairobi
Securities Exchange. Specifically, the study will sought to examine the effect of earnings
qualityon financial performance of companies listed at the Nairobi Securities Exchange,
establish the effect of accounting conservatism on financial performance of companies
listed at the Nairobi Securities Exchange and determine the effect of accruals quality on
financial performance of companies listed at the Nairobi Securities Exchange. Premised
on Agency theory, Normative Approach Theory and Positive accounting theory, the
current study targeted 68 firms listed at the NSE. With a response rate of 51.47%
response rate, the study established that there was a statistically significant positive
relationship between financial reporting quality and firm financial performance of firms
listed at the NSE. The study therefore recommends that companies should ensure they
enhance performance by having sound financial reporting mechanisms. Provisions for
accruals especially leading to earnings management should be proscribed. The study also
established a positive relationship between liquidity and financial performance calling for
having sound working capital policies amongst the firms which enhances firm value.
Given that the relationship between leverage and performance is negative, the foregoing
study calls for establishment of optimal levels of gearing in the firms that enhance
shareholder wealth. The study recommends further studies to increase the scope, the
variables and eve explore other nonlinear regression models like the vector error
correction models.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
- School of Business [1411]
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