DETERMINANTS OF FINANCIAL INSTRUMENTS DISCLOSURE QUALITY AMONG LISTED FIRMS ON NAIROBI SECURITIES EXCHANGE
Abstract
The objective of this study was to determine the influence of liquidity, leverage and market risk on financial instruments disclosure quality among listed firms in Kenya. The target population for this research comprised of companies listed at the Nairobi Securities Exchange. This study examined a sample of fifty-nine listed firms. This empirical study developed an un-weighted disclosure index consisting of forty-six disclosure items and the scores were used to measure financial instruments disclosure quality. Data were mainly collected from firms’ annual reports. The collected secondary data was analyzed using Stata software where descriptive and inferential statistics were generated. Using multiple regression model, this research study modelled four factors (profitability, liquidity, leverage and market risk) which determine financial instrument disclosure quality. Correlation and panel multiple regression analysis were employed to test four hypotheses and determine association between the independent variables and the dependent variable. From study findings, both descriptive and inferential statistics revealed an average disclosure index of seventy-eight point two per cent. The study revealed that liquidity and leverage are significantly and positively associated with financial instrument disclosure quality. The study further revealed that market risk has an insignificant relationship with financial instrument disclosure quality. Firms should provide high quality financial instrument disclosures to the various stakeholders in order to restore investor confidence minimize information asymmetry and enable informed investment decision making. Further research is encouraged to establish whether the determinants of disclosure would be the same if a weighted disclosure index was used to determine disclosure quality in the Kenyan context.
Key Words: Liquidity, Leverage, Market Risk
CITATION: Wandera, P. O. & Maniagi, M. (2025). Determinants of financial instruments disclosure quality among listed firms on Nairobi Securities Exchange. The Strategic Journal of Business & Change Management, 12 (1), 34 – 43. http://dx.doi.org/10.61426/sjbcm.v12i1.3168
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DOI: http://dx.doi.org/10.61426/sjbcm.v12i1.3168
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