Top Management Team Diversity and the moderating effect of Discretionary Accounting Choices on Financial Reporting Quality among Commercial State Corporations in Kenya

The study aims to examine the moderating effect of discretionary accounting choices on the relationship between top management demographic diversity and financial reporting quality among state commercial firms in Kenya based on 248 firm-year observations for 2004 -2015. The study used correlational research design to achieve the sought objectives. It lays a broad foundation for the future research work into the theory and practice of financial reporting quality in commercial state corporations. The findings clearly reveal that, there exist both positive and negative relationship between discretionary accounting choices and financial reporting quality. However, the relationship varies with each financial reporting quality proxy measures. The demographic variables that were statistically significant in explaining FRQ were; age, education, tenure, gender and functional background diversity. Hence, managerial characteristics matter in explaining discretionary accounting choices and financial reporting quality in the companies. Despite the findings showed minimal significant effects on earnings quality and timeliness. Discretionary accounting choices should not be used by the management opportunistically but should be used to enhance quality reporting. The study recommends that stakeholders in commercial state corporations should ensure that discretionary accounting choices is improved to decrease manipulations of accounting information in order to increase the quality of reporting

Reconsidering Education for All at a time of Change: Influence of Economic Factors on access to Secondary Education in Narok County, Kenya

This paper sought to determine economic factors that influence access to secondary educational opportunities in Narok County, Kenya and to suggest strategies to help raise the transition rates of learners from primary to secondary schools. The study employed descriptive survey research design involving both qualitative and quantitative approaches. Study participants comprised head teachers, teachers and students in both primary and secondary schools. Stratified sampling technique was used to select twenty-four (24) primary school head teachers, forty-eight (48) primary school teachers and eight (8) secondary school principals. A total of 68 class eight pupils and 44 form one students were selected using simple random sampling from the sampled schools. Data were collected using questionnaires and an interview schedule. Pilot testing was done with questionnaires to test reliability and validity. To obtain the reliability the test-retest method was employed. Pearson Product Moment was employed to compute the correlation coefficient. A correlation co-efficient of 0.77 was obtained. Qualitative data were analysed inductively through content analysis while SPSS was used to analyse quantitative data. Results were presented in form of tables, figures, frequencies and percentages. It was established that household poverty and opportunity costs of education have influences on completion rates and lead to dropouts from basic schooling. The study recommends the need for the government and private sector employing a long term strategy in expanding secondary education in Kenya. This could include poverty mitigation and reduction in cost of secondary schooling and improvement of basic infrastructure, improvement of the quality of education in the country in order to reduce the opportunity costs and also through provision of more subsidies to improve the level of enrollment in basic education

Payment Delays and Financial Performance of Construction Firms in Vihiga County, Kenya

The purpose of this study was to establish whether payment delays affect financial performance of construction firms. The study employed cross sectional research design, stratified simple random sampling and census survey of 32 construction firms. The study relied on secondary data from audited financial reports. Data was analyzed using both descriptive and inferential statistics - multivariate analysis. There was no statistical significant effect between delayed payments and financial performance as measured by Net profit margin and current ratio, probably other factors or measures such as management style and strategies could have affected the two variables. Our conclusion however, is that late payments in commercial transactions by the public or generations  and private entities have detrimental effects on the business environment,  especially by exacerbating the burden of already financially constrained firms which can ultimately push them out of business. The study was only limited to one financial year and construction firm

THE EFFECT OF CORPORATE GOVERNANCE AND CAPITAL STRUCTURE ON PERFORMANCE OF FIRMS LISTED AT THE EAST AFRICAN COMMUNITY SECURITIES EXCHANGE

The purpose of the study was to establish the effect of corporate governance and capital structure on performance of firms listed at the East African community securities exchange. Specifically the study sought to establish the effect of capital structure on the relationship between corporate governance and firm performance of listed companies in Kenya, Tanzania, Uganda, Rwanda and Burundi. Based on the agency theory this study builds a comprehensive framework to answer the research question on whether good corporate governance affects firms performance by integrating capital structure into the governance model. A census survey was carried out on all the 98 listed companies between 2009 and 2013 in Nairobi Securities Exchange, Uganda Securities Exchange, Dar es Salaam Stock Exchange and Rwanda Stock Exchange. Out of the 98 firms that were targeted, 56 were analyzed constituting 57%. The findings revealed that the there was a significant positive relationship between corporate governance and firm performance. The study also confirmed that there is a positive significant intervening effect of capital structure (leverage) on the relationship between corporate governance and firm performance. From a theoretical perspective, this study not only explains how corporate governance affects firm performance, but also uncovers the importance of capital structure in a corporate governance system

THE EFFECT OF CORPORATE GOVERNANCE AND CAPITAL STRUCTURE ON PERFORMANCE OF FIRMS LISTED AT THE EAST AFRICAN COMMUNITY SECURITIES EXCHANGE

The purpose of the study was to establish the effect of corporate governance and capital structure on performance of firms listed at the East African community securities exchange. Specifically the study sought to establish the effect of capital structure on the relationship between corporate governance and firm performance of listed companies in Kenya, Tanzania, Uganda, Rwanda and Burundi. Based on the agency theory this study builds a comprehensive framework to answer the research question on whether good corporate governance affects firms performance by integrating capital structure into the governance model. A census survey was carried out on all the 98 listed companies between 2009 and 2013 in Nairobi Securities Exchange, Uganda Securities Exchange, Dar es Salaam Stock Exchange and Rwanda Stock Exchange. Out of the 98 firms that were targeted, 56 were analyzed constituting 57%. The findings revealed that the there was a significant positive relationship between corporate governance and firm performance. The study also confirmed that there is a positive significant intervening effect of capital structure (leverage) on the relationship between corporate governance and firm performance. From a theoretical perspective, this study not only explains how corporate governance affects firm performance, but also uncovers the importance of capital structure in a corporate governance system

MICRO-CREDIT AND POVERTY REDUCTION AMONG SELF HELP GROUPS WITHIN KISUMU COUNTY, KENYA

Purpose: Micro-credit is an informal source of revenue that was established to bridge the gap between Commercial banks and Formal Micro-finance institutions with an objective of providing small loans to the poor who were discriminated against due to their economic conditions. The aim of this study was to evaluate the relationship between micro-credit and poverty reduction among self-help groups in Kisumu County. Methodology: The research was mainly anchored on Grameen model which focused on funding the poor without collateral and vicious cycle of poverty theory which view poor people as vulnerable hence need to be supported to come out of poverty that is heavily grounded. The study relied on primary data collected using semi-structured questionnaire and observation check with the help of research assistants drawn from Organization staff and group officials. The data collected was analyzed by both quantitative and qualitative methods with the help of SPSS version 20 and excel package. Findings: The findings portray mixed results since micro-credit reduces poverty to a certain level beyond which it starts raising again as measured by changes in the annual income before and after loan acquisition. The impact of loan was moderate on both the living standard and business expansion despite of the majority attending trainings related to micro-credit and poverty reduction. Implication: The researchers recommend frequent training to enhance their intellectual capacity since most have only attained basic education. Training is perceived to be essential for them to enhance their earning potential by minimizing risks related to book keeping, business management and financial   management. The study used cross-sectional method and only focused on credit recipients attached to a specific organization thus the findings may lead to subjective biasness. The researchers therefore recommend further study on the topic using longitudinal method to achieve significant results over a period of time especially in Kisumu County. Value: The finding will help in enhance microfinance models that can add value to both the clients and the financial institutions. The  micro-credit and market linkages, micro-credit and capacity building programs on the economic performance of SHG members should be treated as a priority in  poverty reduction among the disadvantaged groups. Key-words: micro credit, poverty reduction, self-help group

Audit Committee Attributes and Financial Reporting Quality of the State-owned Commercial Enterprises in Kenya

The study examines the relationship between audit committee attributes and financial reporting quality of State-owned Commercial Enterprises in Kenya. An analysis was done on annual reports and financial statements for 122 state-owned commercial for the period between 2008 and 2018. The results indicate that audit committee attributes has statistically significant relationship with financial reporting quality of State-owned Commercial Enterprises in Kenya. Results further reveal the audit committee independence has statistically significant and negative relationship with financial reporting whereas audit committee qualification, size and number of meetings held in a financial year had statistically significant and positive relationship with accrual quality. While audit committee independence and qualification exhibited statistically significant positive and negative relationship with qualitative characteristics respectively, it was evident that audit committee attributes had no significant relationship with timeliness in reporting. It is therefore, concluded that audit committee attributes impact financial reporting quality in State-owned Commercial Enterprises in Kenya requiring the appointing authorities to appoint audit committee members with the right skill mix and qualification to realize value addition services and improve financial reporting oversight. Keywords: Audit Committee Attributes, Financial Reporting Quality, State-owned Commercial Enterprises DOI: 10.7176/RJFA/11-14-12 Publication date:July 31st 202

LEVERAGE, LIQUIDITY AND PROFITABILITY OF BANKS AND INSURANCE FIRMS LISTED AT THE NAIROBI SECURITIES EXCHANGE

Purpose: Banks and Insurance firms keep the finances of other firms and investors. Therefore the study sought to establish the relationship between leverage and liquidity on profitability and determine the effect of leverage and liquidity on profitability of Banks and Insurance firms listed at the Nairobi Securities Exchange. Methodology: A census study was done on all the seventeen Banks and Insurance firms listed at the NSE for a six year period beginning the year 2010 to the year 2015. Secondary data was collected from NSE handbooks and individual firms published financial statements for the respective years. Data was analyzed using correlation analysis and General linear models including ANOVA and regression analysis. Findings: Findings show that a positive relationship exists between leverage and profitability expressed in terms of ROA and a negative relationship exists between leverage and profitability expressed in terms of ROE. Liquidity showed a negative relation with profitability when expressed in terms of ROA whereas a positive insignificant relation exists between liquidity and profitability expressed in terms of ROE. Implication: The study recommends that managers need to gauge the appropriate leverage and liquidity levels to use for firms given their unique circumstances. Value: These findings form the basis of argument and support for proposition that liquidity effects on profitability varies when different measures of profitability are applied. Combining leverage and liquidity aspects to determine probable joint effects on profitability brings about opposite observations on firm profits. Keywords: leverage, liquidity, profitabilit

Corporate governance and modified audit opinion : evidence from state owned enterprises in Kenya

Purpose: The purpose of the study was to examine the relationship between corporate governance practices and modified audit opinion in the commercial and manufacturing sector of state owned enterprises in Kenya. -- Design/Methodology/Approach: The study collected data from 25 companies in the commercial and manufacturing sector covering the period 2013 to 2016. Logistic regression technique was adopted to analyze the variables. -- Findings: The study findings established negative and significant effect of both board size and board independence on modified audit opinion. This results suggest board size and percentage of independent directors significantly influenced the likelihood of state owned enterprises receiving modified opinion. Results on the effect of control variables; leverage and return on assets were statistically insignificant. -- Originality/Value: This study contributes to both theoretical literature and empirical evidence in the corporate governance in public sector context.peer-reviewe

EFFECT OF AUDIT COMMITTEE EFFECTIVENESS AND AUDIT EVALUATION ON AUDIT QUALITY: A CRITICAL LITERATURE REVIEW

  Purpose - This paper focused on the critical review of literature on the effects of audit committee effectiveness and audit evaluation on audit quality and any research gaps in the area of audit quality and recommends any for future research. Methodology – This is was a review of literature on audit committee effectiveness, audit evaluation and audit quality. Findings – The study finds that audit committee effectiveness has a major effect on the audit quality in organizations. In addition, variations in different research methodologies used in the literature explain the inconsistencies in research findings by academicians. Further the study finds that independence of the audit committee, qualification of its members as reflected on the knowledge and expertise and the size of the committee is believed to improve the financial reporting quality which results in high audit quality. Implication – The findings imply that there is no clearly agreeable audit quality framework and how audit committee effectiveness affects audit quality. Value – The study recommends a further investigation on the effect of audit committee qualification on audit quality; the link between audit quality framework, audit quality indicators and audit quality using longitudinal and correlation approaches. The critical literature review points at a number of significant drivers of audit quality which are not fully identified in the expert role of audit committee including the roles of key players in the financial reporting chain viewed as improving financial reporting quality.