dc.description.abstract | There is very limited information available on the e ect of board diversity and internal
controls on Financial Reporting Quality (FRQ) of listed commercial banks in Nairobi Securities
Exchange (NSE) in Kenya. To safeguard stakeholders’ interests, the government
of Kenya has from time-to-time enacted numerous laws and regulations and issued guidelines.
Notwithstanding these intercessions, various organizations have failed to demonstrate
quality nancial reporting in the annual reports and audited nancial statements.
Financial reporting quality promotes accountability and transparency through comprehensive
disclosures. Primarily, it provides high-quality nancial reporting information
concerning economic entities, mainly nancial in nature, useful for economic decisionmaking.
The broad objective of this study was to establish the linkage amongst board
diversity and internal controls on Financial Reporting Quality (FRQ) of commercial banks
listed in NSE. Speci cally, the study determines the e ect of board diversity on FRQ of
NSE listed commercial banks; to examine the in uence of internal controls on the relationship
between board diversity and FRQ of NSE listed commercial banks, and evaluate
the joint in uence of board diversity and internal controls on FRQ of NSE listed commercial
banks. The study used IFRS Disclosure, and qualitative characteristics as indicators
of nancial reporting quality. The study was anchored on agency theory. Correlational
descriptive research design was adopted. The study population consisted of 11 commercial
banks in NSE as at 31st December 2019. Secondary panel data was collected from
the audited annual reports of NSE listed commercial banks for ve years from 2015 to
2019. Descriptive statistics, correlations analysis, panel data model estimations were conducted.
From the ndings, results from the investigation of the rst hypothesis revealed
that board diversity indicators or parameters, jointly had a signi cant e ect on quality
of nancial reporting. Speci cally, age and gender of the board members had individual
positive and signi cant e ect on FRQ whereas quali cation of board members board independence
and FBM were statistically not signi cant. The second objective indicate that
internal controls have signi cant intervening impact on the association between board
diversity and FRQ of rms registered on the NSE. The third objective revealed that board
diversity and internal controls have signi cant joint impact on FRQ of rms registered
on the NSE. Based on the ndings, there is need to embrace board diversity with proper
internal control systems, which acts as an internal governance mechanism put in place by
the rms that are focused towards countering managerial opportunistic behaviours. On
the other hand, the policy initiatives are to use the ndings for their applicability such
that some NSE listed commercial banks had not in the past received best governance at
the board level and yet they are key to the overall performance of the industry as well as
the contribution to growth of the economy | en_US |