Corporate Environmental Reporting Disclosure and Financial Performance of Manufacturing Companies Listed on Nairobi Securities Exchange

Abstract

Conventional accounting systems are limiting since they fail to directly address corporate environmental reporting. Environmental Sustainability has become a major pillar of today’s business activities. One of the accounting information goals is helping users in predicting the returns on their investment. The main purpose of the study was to determine corporate environmental reporting disclosure and financial performance of manufacturing companies listed on the NSE. The study objectives found out the effects of quantity of disclosure of corporate environmental reporting and disclosure, content of corporate environmental reporting and disclosure, research and development of corporate environmental reporting and disclosure and to identify the effect of industry practice of corporate environmental reporting and disclosure on financial performance of manufacturing firms listed in the Nairobi Securities Exchange. The study tested the null hypothesis on the significant relationship between quantity of disclosure, content, research and development, industry practice of corporate responsibility and financial performance of manufacturing firms listed in the NSE. This study employed a descriptive and causal research design to selects manufacturing companies listed in NSE. The study was carried out in manufacturing companies listed in Nairobi Security exchange (NSE). The target population was 32 respondents. The study employed census survey to select the 32 respondents including the management and finance heads. The study used questionnaires secondary data collection schedule to collect data. Questionnaires captured independent variables as secondary tool captured dependent variable. Descriptive statistics involved frequencies and percentages while inferential statistics based on Pearson correlation and simple linear regression analysis. Data was presented by use of charts. The findings were that quantity of disclosure had a significant effect on financial performance among listed manufacturing firms at NSE (t statistic=9.971, p-value=0.012< 0.05). Content and quality had a significant effect on financial performance among listed manufacturing firms at NSE (t-statistic=2.302, p value=0.037< 0.05). Research and development had a significant effect on financial performance among listed manufacturing firms at NSE (t-statistic=5.202, p value=0.000<0.015). Industry practice had a significant effect on financial performance among listed manufacturing firms at NSE (t-statistic=10.357, p-value=0.021<0.05). The study recommended that manufacturing companies should disclose information to enable trust since accountability will easily be achieved through quantity of information disclosed. Manufacturing companies should report information objectively by capturing the content of information and display it in the best quality form as much as possible. Manufacturing companies needs growth hence use of research and design will increase the scope of financial growth through innovation and new disclosure trends that will lead to prosperity. Manufacturing companies should employ industry practice trends especially compliance to keep them within the law and achieve financial performance.”