Effect Of Voluntary Accounting Disclosures On Investor Confidence Of Non-financial Firms Listed In Nairobi Securities Exchange

Abstract

Voluntary accounting disclosures involve provision of information by a company which are beyond the legal requirements. Making voluntary accounting disclosure uses resources and the value gained from these disclosures need to be more than those costs for these disclosures to be justifiable. Moreover, most empirical studies have contrasting findings on the business case of voluntary corporate disclosures. The purpose of this study was to establish the effect of voluntary accounting disclosures on investor confidence of non-financial firms listed in the NSE. The specific objectives of the study were to determine the effect of forward-looking information disclosure, value-added statement disclosure, and human resource accounting information disclosure and social accounting information disclosure on investor confidence of non-financial firms listed in the NSE. The study was based on agency theory, legitimacy theory, stakeholder theory and signalling theory. A causal design was used in this study. The study population is the 47 non-financial firms listed in the NSE. Data from the audited financial statements of the 47 non-financial firms listed at the NSE. The panel data collected was analysed using descriptive statistics, exploratory statistics and panel data regression analysis. The study findings indicated that forward-looking information disclosure did not have a significant effect on investor confidence of the non-financial firms listed in the NSE. The findings further determined that valued added statements disclosure had a significant positive effect on investor confidence of the non-financial firms listed in the NSE. However, human resource accounting information disclosure did not have a significant effect on investor confidence of the non-financial firms listed in the NSE. Additionally, social accounting information disclosure did not have a significant effect on investor confidence of the non-financial firms listed in the NSE. This study recommends that all non-financial firms listed in the NSE should critically consider in-depth disclosure of value added information using value added statements as a voluntary disclosure in the process of accounting communication to the stakeholders including investors.