CORPORATE DISCLOSURES AND FINANCIAL PERFORMANCE OF MANUFACTURING AND ALLIED FIRMS LISTED AT THE NAIROBI SECURITIES EXCHANGE, KENYA

Abstract

The study's main objective was to establish how corporate disclosures affect the financial performance of manufacturing firms listed on the NSE. Precisely, it sought to investigate the effect of risk disclosures on the financial performance of manufacturing entities listed on the NSE, financial disclosures on the financial performance of manufacturing companies quoted on the NSE, corporate governance disclosures on the financial performance of manufacturing companies quoted on the NSE and influence of corporate social responsibility disclosures on the financial performance of manufacturing companies listed on the NSE. For the purpose of determining the relationship between the dependent and independent variables, descriptive and inferential statistics were employed. To summarize the relationship between financial success and company disclosures, we produced descriptive statistics such as frequency and percentage. Correlation analysis was used to measure the strength of the association between variables, whereas regression analysis was used to understand the nature of the relationship between independent and dependent variables. Panel data diagnostic tests and regression analysis were conducted. From analysis of both primary and secondary data sets, risk disclosure was found to be a significant predictor of financial performance (regression co-efficients of 0.268 and 3.246 respectively) Regression analysis for primary data revealed a positive and significant relationship between financial disclosure and financial performance while secondary data revealed a positive and insignificant relationship. (Regression co-efficient of 0.225 and 0.0997 respectively), for corporate governance disclosures, regression analysis for both primary and secondary data revealed a positive and significant relationship between governance disclosures and financial performance (regression co-efficient of 0.271 and 2.391 respectively). Study results revealed a positive and significant relationship between social disclosure and financial performance for both the primary and secondary data sets (regression co-efficient of 0.252 and 0.3736 respectively). Based on the findings, the study concluded that corporate disclosures influence financial performance of manufacturing companies listed on the NSE. This was evidenced by an R squared of 0.659 for primary data and R squared of 0.6367 for secondary data. The study suggested increased disclosures by listed corporations to eliminate knowledge asymmetry with stakeholders. The security markets regulator could also increase listed company disclosure standards to bolster investor confidence and attract investors.