A survey into social accounting disclosure in published annual financial statements: the case of companies quoted at the Nairobi stock exchange (NSE).
Nabhan, Mohamed A
MetadataShow full item record
Corporate social responsibility has received a great deal of public and local government attention worldwide and in Kenya in the recent years. Businesses have now been urged to make a more adequate response to current issues of social concern. Overtime, these pressures have led to increased awareness in the accounting profession towards developing an adequate and reliable system concerned with the accountability and evaluation of the firms social contribution to the society. This resulted in the development of a new accounting boundary referred to as "social accounting" taking into account the disclosure of social information to the users of financial statements, an area generally overlooked in the accounting profession in Kenya. This trend prompted the need for a survey in the above specific area of corcern. Three objectives were set which will generally try to provide some empirical evidence relevant to the social accounting disclosure questions in the Kenyan setting and its overall acceptability by the Kenyan companies. The survey explored the nature and extent of social information disclosure in the annual reports of 43 quoted companies at the Nairobi Stock Exchange (NSE) for the past five years (objective one and two), and showed that the amount and diversity of social disclosure received momentum over the years. The categories of social information reported in the Kenyan annual reports generally fell into four broad areas of interest mainly human resource, environment, the community and consumerism. However, companies disclosed largely their human resource and community involvement aspects as compared to the others in their annual reports. The survey also found out that 87 percent of the sampled companies adopted the Descriptive form of social disclosure while only 13 percent adopted the Cost-Outlay approach. Overall, social accounting disclosure showed a general increased trend over the five year period, with an average positive growth rate of 13.25 percent. The Industrial and Allied sector had the highest growth rate of 53.35 percent as compared to the Commercial and Service sector which had the lowest average growth of negative 3.115. percent. The information set to achieve the third objective was collected through two structured questionnaires which were administered to 43 companies. From the annual reports of these companies, 25 companies were found to disclose the highest rate of social information in their annual reports and out of them, 20 completed questionnaire A with respect to the positive arguments towards social information disclosure. 18 companies which were considered to disclose the lowest rate of their social information received questionnaire B with arguments against social information disclosure in the annual reports of which 13 companies completed the questionnaire. The findings indicates that companies are aware of some of the aspects of the concept of social accounting. All companies agreed that it is of self interest to disclose social information as long as the company engages in such social activities. Furthermore, companies also agreed that the disclosure of social information provided investors with a more sufficient and reliable inforn:ation to evaluate their investment decisions towards a company. This indicates that social information has some form of value to the users of financial statements. However at the extreme, companies pointed out that social accounting disclosure is still a weak phenomena in Kenya. The poor disclosure of social information by companies had nothing to do with the cost or confidentiability of social information towards the company operations, but the lack of a formal measurement and an adequate system of reporting social activities have generally prevented companies from adopting the system of social information disclosure to the users of financial statements. Overall, the evaluation of the current social accounting disclosure practice in Kenya shows to have a positive response with the increasingly reporting status of social information among the Kenyan companies in the annual corporate reports over the five year period. However there is lack of adequate awareness and uniformity on the system of social disclosure, as the contents and format of social reporting of these companies in the annual financial reports are still in the earliest form of social disclosure and varied considerably from company to company and from year to year.
xmlui.dri2xhtml.METS-1.0.item-identifier-citationMaster of Bussiness Administration
Univesity of NairobiSchool of Bussiness