dc.description.abstract | In the recent past globally there has been a push to ensure diversity in representation across
gender, age, nationalities among other diversity traits. For corporates, board diversity
ensures heterogeneity of thoughts in boards enhancing the monitoring roles of a board
which is expected to improve firm outcomes including accounting quality through financial
reports. Financial reporting quality is likely to increase if financial reporting standards are
adopted in an environment with strong enforcement measures. However, studies on board
diversity, IFRS adoption and accounting quality have returned mixed findings. The main
objective of the study was to evaluate whether there is association between diversity of
boards, the application of IFRS, legal enforcement, and the accounting quality of
companies quoted on East African equity markets. Accounting quality was assessed using
indicators such as earning management, financial reporting value relevance, and financial
information’s fundamental qualitative qualities. IFRS adoption was assessed using an IFRS
compliance score sheet developed from IFRS disclosure checklist. Legal enforcement was
assessed using WGI measures of regulatory quality and the rule of law. Blau Index and
covariance were used to determine board diversity. Theoretically, the study was anchored
on the upper echelon’s theory, which establishes the impact of senior executives’ traits on
firm outcomes, agency theory highlights the monitoring responsibility of directors and
information asymmetry theory which provides mechanisms guiding finance disclosures by
firms. The study was conducted using a descriptive research approach and the positivist
research philosophy. 53 listed firms provided secondary data drawn from Kenya, Uganda,
Tanzania and Rwanda for a period of 8 years from 2013 to 2020. Descriptive statistics was
utilized to gain insights from the research data. Diagnostics tests were conducted and the
models used were found to be robust. Research models were tested using regression
analysis. Baron and Kenny's (1986) mediating and moderating tests were applied. The
findings show that board diversity significantly influenced the quality of accounting
information. IFRS adoption mediated the association of board diversity and the accounting
quality. Legal enforcement significantly moderated the relationship between board diversity
and accounting quality. The study established a joint significant effect of IFRS adoption
and legal enforcement on the accounting quality of listed firms in the East Africa securities
exchanges. The research contributes to the existing body of knowledge on board diversity,
adoption of IFRS, and quality of accounting, specifically it documents findings for East
African nations which had been given minimal attention by prior studies. The study
recommends that the financial markets and the accounting profession regulators need to
develop guidelines such as allocation of specific quotas to women and youth to enhance
board diversity during board composition and enhancement of financial disclosures by
listed firms in East Africa. In addition, East African countries need to enhance adherence to
the rule of law and improve on the quality of their regulations by developing strict
punishment mechanisms for non-compliance to the laid rules. | en_US |