QUALITY AUDIT, CORPORATE GOVERNANCE AND INVESTOR CONFIDENCE ON THE COMPANIES LISTED AT THE NAIROBI SECURITIES EXCHANGE, KENYA
Sule Ouma Warren - Master of Business Administration Student, Department of Accounting and Finance School of Business, Economics and Tourism, Kenyatta University, Kenya
Dr. Moses Odhiambo Aluoch (Ph.D) - Lecturer, Department of Accounting and Finance, School of Business, Economics and Tourism, Kenyatta University, Kenya
ABSTRACT
An important aspect among the prime movers in the equity trading market in the Nairobi Securities Exchange is the investor confidence. It is against this background that this research project was finding out the interplay to which an organization level corporate management practices and governance and quality audit work have on confidence of investor. The objective of this research was to determine how the audit disclosure impacts the investor confidence, how the audit independence impacts the investor confidence, how the audit fees impact the confidence of the investor, how the quality of financial reporting impacts the confidence of the investor and the moderate roles contributed to the above-mentioned effects by corporate governance. The research paper based itself on the theories of signalling effect, stake holder, and resource dependence as well as institutional theories respectively. The researcher also reviewed other research works done previously the during the time series between the year 2020 and 2024 in addition to other previously done research. It also involved descriptive research. It adopted the longitudinal research design and panel method to be in a standpoint at defining the causal relationship among the variables which informed the various assertions arrived at. The researcher confined in analysing data for the period 2020-2024 that was sourced from the published annual financial reports and analysed from targeted 65 listed companies at Nairobi Securities Exchange. The data was analysed inferentially and descriptively to establish correlation between the variables in addition regression analysis. The STATA version 13 was used in carrying out all the analysis. Additionally, several tests with regards to validation and variability to challenge validity of data collection instruments, reliability of the information and regression analysis model of linear form were utilized in analysing the study variables relationships. The research concluded that auditor independence, audit fees and quality of financial reporting had a significant effect on the confidence of the investor while various auditor disclosures were deemed of no significance. Moreover, quality audit and corporate governance were noted to be of substantial effect on the confidence of investor. The research further provides recommendations inter alia, strengthening of corporate governance structures, enhancing auditor independence and fostering high quality reporting and auditor disclosures. During the research, matters ethics was also considered.