| dc.description.abstract | The objective of this study is to investigate the perception of users regarding the level of disclosure and their confidence levels of information disclosed in the financial reports of companies listed on the Nairobi Stock Exchange (NSE). A survey methodology was utilized involving a selected sample of information users, namely the institutional investor. A total of 95 questionnaires were sent out and 45 of the respondents answered back, a response rate of about 47%.
Results of the study show that institutional investors do not highly rate the disclosure levels neither do they place high confidence in the items disclosed in the financial statements. The conclusion is that institutional investors do not perceive reported information as adequate and relevant to investment decisions. In particular, reported information was insufficient from a risk management perspective. This unfavorable perception could prevent information from being incorporated into share prices.
As the issue of level of disclosure of and confidence of different parts of the. corporate annual report are concerned, the study shows that institutional investors had no full confidence in all sections contained in the financial report. Therefore, from the institutional user perception, one cannot be assertive that financial statements in their present form are regarded sufficient in formulating investment decisions. A major challenge faced was to do with perception.
It is not clear the extent to which perception plays a critical role in the daily decision making process for all investors in this market. It is also not clear whether investor's behavior is based on their perception of what reality is and not on reality itself. Another challenge was getting the investors to respond to the questionnaire. A number of them were reluctant disclosing any information that expose their decision making process. | en_US |
