This paper aims to utilize institutional theory to examine the impact of the 2008-2010 regulatory reforms on compliance with mandatory disclosures by savings and credit co-operatives (SACCOs) in Kenya.
Two-stage least squares panel regression approach is utilized to analyse data covering 1,272 firm-year observations for 212 SACCOs over a six-year period, 2008-2013. An analysis of the pre- and post-regulation impacts on compliance with mandatory disclosure requirements is also performed.
The results, which are in support of the institutional theory, reveal that licensed SACCOs engage in higher compliance with mandatory disclosures, and this improves from the pre- to the post-regulation period. The results show that SACCOs under inquiry engage in lower compliance with mandatory disclosure requirements, especially in the post-regulation period. The findings also reveal a significant and positive association between SACCO size, co-operative governance and compliance with mandatory disclosure requirements.
The study focuses on transition-level SACCOs in a single country. An extension into other jurisdictions with nascent, transitional and mature SACCOs would provide greater insights into the impact of disclosure regulation. Further, the study uses a self-constructed disclosure checklist which is subject to coding errors and biases.
The findings highlight the need for SACCO regulators and accounting professional body to devise incentives to improve the level of compliance with required disclosures.
The study contributes to the dearth of evidence on the efficacy of the introduction of mandatory disclosure requirements in a developing country where compliance is problematic because of difficulties with enforcement.
The authors would like to acknowledge comments from the anonymous reviewers, participants in the Paper Development Workshop organized by the International Association for Accounting Education and Research (IAAER) during the 12th IAAER World Congress of Accounting Educators and Researchers, and participants in the 6th and 7th African Accounting and Finance Association (AAFA) Conference. The corresponding author wishes to thank the Association of African Universities (AAU) for providing research funds for this study. They thank the officers at SASRA and the Commissioner of Co-operatives in Kenya for providing data for this study. The research assistance provided by Emmanuel Musyoka and Jacktone Owande is much appreciated. The authors would also like to note that the initial development of this research idea was positively influenced by the “pitching template” created by Prof Robert Faff (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2462059). Any errors in this paper are the sole responsibility of the authors, and not any of the individuals mentioned in this acknowledgement.
Mathuva, D.M. and Chong, H.G. (2018), "Impact of regulatory reforms on compliance with mandatory disclosures by savings and credit co-operatives in Kenya", Journal of Financial Regulation and Compliance, Vol. 26 No. 2, pp. 246-270. https://doi.org/10.1108/JFRC-04-2016-0036Download as .RIS
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