MANAGERIAL OWNERSHIP AND EARNINGS MANAGEMENT OF LISTED INSURANCE COMPANIES IN KENYA
Abstract
The purpose of this study was to determine the influence of ownership structure, board competency on earnings management of listed insurance companies in Kenya. The study objectives were; to establish the influence of managerial ownership on earnings management of listed insurance companies in Kenya. The study employed descriptive survey design and correlation survey design. The research population consisted of all the 6 Insurance companies listed on the National Securities Exchange as found on the NSE website. The research population consisted of 102 supervisory staff of all the 6 Insurance companies listed on the National Securities Exchange as found on the NSE website. Questionnaires were administered as well as data was extracted from the annual reports and accounts of the Insurance Companies over the period 2010 to 2017. Performance adjusted discretionary accrual model was employed in this study to determine earnings management. The data was analyzed by use of multiple regressions and presented using mean, standard deviations using tables. The result of the analysis was an indication that there is a relationship between managerial ownership and earnings management. The study therefore rejected the null hypothesis that managerial ownership does not influence earnings management of insurance companies in Kenya. It came out clearly in this research work that earnings management is determined and influenced by several factors which are dependent on the type of ownership structure a firm has. One of the main reasons why firms manage earnings is to influence the public towards investing in the firm for competitive advantage reasons. Therefore, there is a significant relationship between managerial ownership and earnings management of insurance firms listed on the NSE. The study recommended that insurance firms whether listed or not listed should resist the temptation of managing earnings to ensure prudential financial practice. The government should implement stringent measures against managing earning by listed insurance firms to ensure a transparent and competitive world to do business under.
Key Words: Managerial Ownership, Earnings Management, Insurance
CITATION: Mafunga, M. N., Fwamba, R., & Ondiek, A. (2019). Managerial ownership and earnings management of listed insurance companies in Kenya. The Strategic Journal of Business & Change Management, 6 (4), 120 – 130.
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DOI: http://dx.doi.org/10.61426/sjbcm.v6i4.1376
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