A Critical Examination of the Determinants of Timely financial reporting by Listed Manufacturing Firms in Kenya


Authors : Ismael Mwanthi Mbuvi

Volume/Issue : Volume 7 - 2022, Issue 10 - October

Google Scholar : https://bit.ly/3IIfn9N

Scribd : https://bit.ly/3gYqa7F

DOI : https://doi.org/10.5281/zenodo.7269297

The study was to espouse on the effect of timely financial reporting by NSE listed manufacturing firms in Kenya. It aimed at determining the crucial determinants/factors that influence timely financial reports to enhance efficiency and productivity of these firms. Method: The study utilized the descriptive research approach in an effort to measure the data patterns in the aforementioned title. The population of the study was all 10 registered manufacturing firms within the Nairobi Securities Exchange. The secondary data was collected from the individual listed sample firm’s annual reports and financial statements at the 5 years period. The study adopted a descriptive research method, it was also arguably quantitative in nature because it majorly relied on secondary data sources from existing published audited financial statements of the listed manufacturing entities for the financial years 2017 – 2021 as reported. Financial information extracted from the audited financial statements based on the 5 ratios of the Altman Z-Score model were used to forecast financial distress of the 10 manufacturing firms. Findings: The study findings were that the level of board independence, audit and risk committee effectiveness, board size, and firm size barely have any significant correlation whatsoever with financial reporting quality and timeliness to effect change in entity performance. Further study findings established that the model entailing; entailing corporate governance that include; board independence, audit and risk committee, and board size, as well as firm size, explains timely financial reporting to a very least extent with a coefficient of determination value of 2.04%. Therefore it was almost clear that certain factors seldom possessed greater influence in timely delivery of quality financial reports by these firms. In contrast, operating in manufacturing, services and technology sectors and listing in the NSE index have a substantial positive influence on the timeliness of reporting from small, medium to large firms. Additional study findings were that that the model entailing corporate governance that include; board independence, audit and risk committee, and board size, as well as firm size, does not significantly forecast financial reporting quality. Final study findings were that board size have a slim influence on timeliness and quality reporting. Implications for Research and Practice: This study has majorly used secondary data to explore the findings, empirically, primary data can also be utilized to ascertain similar results. This can ensue additional information or infer differences with established findings to this particular study. The statistical analytical techniques of the present research were multiple linear regressions and correlation analyses which involved the use of the Altman Z-Score model. Keywords: Corporate governance, financial reporting and Manufacturing firms, Nairobi Stock Exchange.

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