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Article
Publication date: 14 May 2018

David Mutua Mathuva and H. Gin Chong

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…

Abstract

Purpose

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.

Design/methodology/approach

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.

Findings

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.

Research limitations/implications

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.

Practical implications

The findings highlight the need for SACCO regulators and accounting professional body to devise incentives to improve the level of compliance with required disclosures.

Originality/value

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.

Details

Journal of Financial Regulation and Compliance, vol. 26 no. 2
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 8 May 2018

David Mutua Mathuva

In Kenya, an award for reporting excellence is presented annually to the entities in the public and private sector. The purpose of this paper is to examine the…

Abstract

Purpose

In Kenya, an award for reporting excellence is presented annually to the entities in the public and private sector. The purpose of this paper is to examine the characteristics of savings and credit cooperatives (SACCOs) that apply for the annual reporting excellence award in Kenya.

Design/methodology/approach

The study employs correlation and probit regression analyses to establish the factors which explain the decision by SACCOs to participate in the Financial Reporting (FIRE) excellence award. The study utilizes data consisting of 1,272 firm-year observations for 212 SACCOs, over the period 2008-2013.

Findings

Consistent with institutional and legitimacy theories, the results demonstrate that structural and governance variables are significant and positively associated with the decision to participate in the annual FIRE awards by SACCOs in Kenya. Similarly, larger SACCOs and those that have adopted best cooperative governance practices are more likely to participate in the annual FIRE awards. The results also reveal that SACCOs audited by the Big 4 audit firms are more likely to participate in the annual FIRE awards.

Research limitations/implications

The study focuses on the factors explaining the decision to participate in the annual reporting excellence awards by organizations in a specific sector. Further studies can adopt a multi-sectoral approach to investigate the same phenomenon.

Practical implications

The findings highlight the importance of cooperative governance and resources in explaining why SACCOs choose to participate in the FIRE awards.

Originality/value

The study adds onto the dearth of literature on the aspect under focus. Globally, very few studies have examined the drivers of the decision to participate in reporting excellence awards by organizations.

Details

Journal of Accounting in Emerging Economies, vol. 8 no. 2
Type: Research Article
ISSN: 2042-1168

Keywords

Article
Publication date: 17 October 2016

David Mutua Mathuva, Elizabeth Wangui Muthuma and Josephat Mboya Kiweu

This paper aims to investigate the impact of name change, if any on the financial performance of deposit-taking savings and credit co-operatives (SACCOs) in a developing…

Abstract

Purpose

This paper aims to investigate the impact of name change, if any on the financial performance of deposit-taking savings and credit co-operatives (SACCOs) in a developing country characterized by a vibrant SACCO sector. Sparse studies exist on the impact of name changes on revenue-cost performance in mutual financial institutions such as SACCOs.

Design/methodology/approach

The study uses a standard event methodology over a six-year period (2008-2013) to investigate the impact of name change on the return on assets (ROA) and operating profit margin (OPM). The study then uses a panel regression method to study the impact of name change on ROA and OPM for a sample of 212 deposit-taking SACCOs over the period 2008-2013.

Findings

The results, which are robust for a variety of controls, provide evidence in support of a consistent positive association between name change and subsequent financial performance of deposit-taking SACCOs in Kenya. The positive impact of name change seems to be experienced about four years after the name change. The results reveal muted influence of regulation on name change and financial performance of SACCOs in Kenya.

Research limitations/implications

The study focuses solely on deposit-taking SACCOs in a developing country context over a six-year period only. Extending the time period and including a sample of control SACCOs operating purely back-office service activities would add power to the analyses.

Practical implications

The current study illustrates the contribution of name change on the financial performance of SACCOs in a developing country characterized by a vibrant SACCO sector. Overall, the results show that name change announcements signal an improvement in SACCOs’ future prospects.

Originality/value

This study provides empirical evidence on the contribution of name change announcements on the financial performance of SACCOs in a developing country context. The study adds to the sparse literature on the impact of name change on the financial performance of mutual financial institutions that are not listed on the securities exchange.

Details

Management Research Review, vol. 39 no. 10
Type: Research Article
ISSN: 2040-8269

Keywords

Article
Publication date: 18 November 2021

David Mutua Mathuva and Moses Nzuki Nyangu

In this paper, the authors investigate whether the systemic local banking crises (LBCs) and global financial crisis (GFC) impact the association between bank profit…

Abstract

Purpose

In this paper, the authors investigate whether the systemic local banking crises (LBCs) and global financial crisis (GFC) impact the association between bank profit efficiency and earnings quality in developing economies.

Design/methodology/approach

Using panel data spanning 29 years over the period 1991–2019 for 169 banks drawn from five East African countries, the authors perform difference-in-difference multivariate analyses using the generalised method of moments (GMM) system estimator on a sample consisting of 2,261 bank-year observations.

Findings

The results, which are robust for endogeneity and other checks, show that banks with higher profit efficiency consistently report higher quality earnings. The authors further establish that whereas systemic LBCs contribute negatively to bank earnings quality, the GFC tends to have a positive impact. These results are upheld when the joint impacts of both systemic LBCs, GFC and profit efficiency on earnings quality are considered. The positive influence of profit efficiency and GFC on earnings quality is pronounced under income-decreasing earnings management. The impacts of profit efficiency, LBCs and GFC on earnings quality appear to be non-monotonic and vary across the sampled countries.

Research limitations/implications

The study's findings are based on banks in five developing countries within a regional economic bloc. Additional studies could focus on other economic blocs for enhanced generalisability of the findings. In addition, some of the variables examined are studied at bank-level, while other variables are at country-level. Finally, the study establishes an association between the variables of interest, and this does not necessarily imply causation.

Practical implications

The results provide useful insights to bank regulatory and supervisory agencies on the need to exercise increased risk-based scrutiny over bank loan loss provisioning and minimum loan loss reserve requirements. From an audit perspective, auditors need to be cautious and apply an enhanced risk-based audit especially when auditing banks during and after a financial, banking or systemic crisis. Credit rating agencies need to pay closer attention to the LLPs of distressed banks. Finally, bank investors and customers should be cautious when using bank financial statements, since bank managers of poorly performing banks might engage in aggressive earnings management.

Originality/value

The study is perhaps the first to examine the joint effects of systemic LBCs on the association between bank profit efficiency and the quality of earnings in a larger dataset of banks in a developing regional economic bloc. The authors also employ the GMM system estimator in the modelling, which helps address some weaknesses in prior studies.

Details

Journal of Applied Accounting Research, vol. 23 no. 3
Type: Research Article
ISSN: 0967-5426

Keywords

Article
Publication date: 29 July 2019

David Mutua Mathuva, Venancio Tauringana and Fredrick J. Otieno Owino

The nature of corporate governance (CG) mechanisms in an entity may influence the timeliness of the audited annual report. The purpose of this paper is to argue that the…

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Abstract

Purpose

The nature of corporate governance (CG) mechanisms in an entity may influence the timeliness of the audited annual report. The purpose of this paper is to argue that the “quality” of CG in a firm has a significant association with the time it takes the audited annual report and financial statements to be released.

Design/methodology/approach

Using a set of 543 firm-year observations over the period 2007–2016, the authors examine whether a validated CG-Index is associated with audit report delay (ARD). The authors employ both granular as well as aggregated approaches to the analyses. In addition, the authors include control variables known to have an association with ARD in the panel data regressions.

Findings

The findings, which are robust for self-selection among other checks, reveal that financial expertise in the audit committee, board size, board meetings and independence in the board are associated with longer ARDs. Some CG attributes such as board diversity (i.e. women and different nationalities in the board) are associated with improved timeliness of the annual reports. The results also reveal that a longer tenure for independent directors in the board is associated with a shorter ARD. Overall, the authors find that the composite CG score has a positive influence on the timeliness of annual reports.

Research limitations/implications

The study focuses on listed companies in one developing country. Additional studies focusing on other jurisdictions could yield more results.

Practical implications

The study is useful in highlighting those CG characteristics firms should focus on toward the attainment of timely corporate reporting to aid in decision making by users.

Originality/value

The study is unique since it emphasizes the importance of focusing on an aggregate CG-Index, and the contribution of the CG-Index toward the timeliness of annual reports.

Details

Journal of Accounting in Emerging Economies, vol. 9 no. 4
Type: Research Article
ISSN: 2042-1168

Keywords

Book part
Publication date: 22 October 2019

David Mutua Mathuva, Mumbi Maria Wachira and Geoffrey Ikavulu Injeni

In this chapter, we examine whether corporate environmental reporting (CER) by listed companies in Kenya improves stock liquidity. The investigation is motivated by the…

Abstract

Purpose

In this chapter, we examine whether corporate environmental reporting (CER) by listed companies in Kenya improves stock liquidity. The investigation is motivated by the growing interest by corporations, investors, and regulators toward embracing ecological protection with a view to creating sustainable societies for the future.

Design/Methodology/Approach

Using a panel dataset comprising of 244 firm-year observations from 50 listed firms in Kenya over a five-year period (2011 to 2015), we perform fixed-effects regressions to discern whether CER is associated with stock liquidity. To examine this, we utilize bid-ask (as well as quoted) spreads measured over month −9 to month +3 relative to a firm’s year end.

Findings

Despite the seemingly low levels of CER across firms in the sample (average: 32.6%), the results depict that CER is positively associated with stock liquidity. The results are robust even when we consider changes in bid-ask spreads and CER together with the other variables. The same results emerge when we study the association between bid-ask spreads and each CER item at a time over the period 2011–2015.

Practical Implications

The results imply that listed companies in Kenya that engage in higher CER seem to be more attractive to investors. The higher CER seems to improve the information environment, hence reducing information asymmetry and therefore attracting investors. The results provide some evidence of positive economic consequences of engaging in additional disclosure over and above the traditional corporate financial reporting.

Originality/Value

The study adds onto the dearth of literature on the economic consequences of embracing additional disclosure frameworks in developing countries where the adoption of alternative reporting frameworks is at infancy.

Details

Environmental Reporting and Management in Africa
Type: Book
ISBN: 978-1-78973-373-0

Keywords

Book part
Publication date: 28 March 2022

Mumbi Maria Wachira and David Mutua Mathuva

Over the last few decades, corporate environmental reporting (CER) has received substantial attention due to complex societal and ecological challenges experienced at a…

Abstract

Over the last few decades, corporate environmental reporting (CER) has received substantial attention due to complex societal and ecological challenges experienced at a global scale. While there has been growth in CER research across the world, we know very little of the state of CER research in Africa. In this paper, we provide a comprehensive literature review of CER in sub-Saharan Africa to demonstrate its current state, uncover gaps in extant studies and identify areas for further research in the region. We perform a metasearch on the Financial Times Top 50 journals in addition to wider analyses using African Journals Online (AJOL) and Google Scholar between 2008 and 2020. Though there is some progress in interrogating CER in the region, there is much leeway for further research into how public and private corporations provide an account for their interaction with nature. Extant studies have examined how CER is often subsumed within corporate social responsibility initiatives while other studies explore ways in which CER can provide accountability mechanisms in the mining sector of select countries. Important areas of future research include the influences of legal, cultural and political systems on the level of CER, the tensions between economic development driven by multinational corporations and the necessity for ecological protection. Finally, further research could investigate the role CER can play in encouraging specific corporate disclosures around GHG emissions, especially given global efforts being undertaken to mitigate the effects of climate change.

Details

Environmental Sustainability and Agenda 2030
Type: Book
ISBN: 978-1-80262-879-1

Keywords

Article
Publication date: 1 July 2014

David Mutua Mathuva

The purpose of this paper is to investigate whether non-financial firms listed on the Nairobi Securities Exchange (NSE) exhibit a target cash conversion cycle (CCC). The…

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Abstract

Purpose

The purpose of this paper is to investigate whether non-financial firms listed on the Nairobi Securities Exchange (NSE) exhibit a target cash conversion cycle (CCC). The study also examines the speed of adjustment to the target CCC and the factors that influence corporate decisions on the optimum length of the CCC.

Design/methodology/approach

Based on a sample of 33 publicly traded firms on the NSE for the period between 1993 and 2008, cross-sectional and time series analyses were carried out on the data comprising 468 firm-years. A target adjustment model was developed to examine the significant determinants of the CCC. Various regression approaches including ordinary least squares, fixed effects and two-stage least squares estimation models were used in data analysis.

Findings

The results, which are robust for endogeneity, show that non-financial firms listed on the NSE maintain a target CCC. Further analysis reveals that these firms adjust to the target CCC at a slower rate. The results show that the determinants of the CCC include both firm-specific and economy-wide factors. Specifically, the study establishes that older firms and firms with more internal resources maintain longer CCC. Moreover higher return on assets, investment in capital expenditure and growth opportunities have a significant negative association with the CCC. The results also show a significant positive relation between inflation and the CCC.

Practical implications

The study establishes that other than internal firm-specific factors, the CCC is also influenced by inflation, which is an external, economy-wide factor.

Originality/value

To the best of the author's knowledge, this is the first study to examine whether listed non-financial firms in a frontier market maintain a target CCC.

Details

Journal of Accounting in Emerging Economies, vol. 4 no. 2
Type: Research Article
ISSN: 2042-1168

Keywords

Content available
Book part
Publication date: 22 October 2019

Abstract

Details

Environmental Reporting and Management in Africa
Type: Book
ISBN: 978-1-78973-373-0

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