Effect of Integrated Reporting on Firm Value of Listed Companies in Kenya

Abstract

The aim of this paper was to evaluate potential benefits of the Integrated Reporting <IR> on listed firms at NSE. The study draws on stakeholders, legitimacy and agency theories to analyze the effects of <IR> on firm value. The study hypothesizes that there are positive associations between firm value and integrated reporting. The study used content analysis procedures to examine the extent of <IR> in annual reports (2015-2019) of 56 listed firms on NSE. The study developed proxies for Integrated Reporting index based on IIRC framework. The study used panel data regression to establish the association between the <IR> and firm value. The study found that <IR> affect firm value (using TQ measure) and had no significant effect on firm value (using ROA). It also showed that <IR> is positively related to ROA and negatively related to TQ among listed companies in Kenya. The findings also shows that firms that implement <IR> Framework have higher values with respect to ROA. This finding indicate that high value firms tend to embrace <IR> framework that is consistent with the prior studies unlike low value firms. However, the result shows that the most forthcoming companies in terms of <IR> have inferior firm value with respect to TQ compared to firms that had not embraced <IR>. Integrated reporting rate of adoption was low, but grew steadily from 9% (5 out of 56) in 2015 to 41% (23 out of 56) in 2019. This indicates that <IR> is gaining prominent and is the future of corporate disclosure. The study is limited to emerging countries like Kenya on the effect of <IR> on firm value. The finding is helpful to policy maker and prepares of corporate reports to establish the benefits of <IR> and embrace the integrated thinking of all aspect of business.

Citation: Robert O. Opanyi  and Dominic A. Omare (2022)  Effect of Integrated Reporting on Firm Value of Listed Companies in Kenya, European Journal of Accounting, Auditing and Finance Research, Vol.10, No. 7, pp.31-54

Keywords: Firm Value, integrated reporting, listed firms on NSE

DOI: https://doi.org/10.37745/ejaafr.2013/vo10.n7pp3152

Article Review Status: Published

Pages: 31-52 (Download PDF)

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