CONTROL ACTIVITIES AND FINANCIAL REPORTING QUALITY OF INSURANCE FIRMS LISTED AT THE NAIROBI SECURITIES EXCHANGE, KENYA
Nicholas Kisuli - Master of Business Administration (Finance Option) of Kenyatta University, Kenya
Dr. Geoffrey Mbuva - Kenyatta University, Kenya
ABSTRACT
Insurance firms have faced a continuous challenge of financial reporting quality and their internal control system they utilize has portrayed dissimilar outcome amongst many past studies. The main objective of this study was to establish the influence of internal control system of control activities on financial reporting quality of insurance firms listed at the Nairobi securities exchange, Kenya. Specifically, the study aimed at establishing the influence of control activities on financial reporting quality of insurance firms listed at the Nairobi securities exchange, Kenya. The study was supported by the following four theories, namely systems theory, agency theory and stakeholder theory. The 6 insurance firms listed at the Nairobi securities exchange, Kenya represent the study population where by survey was used to collect data for the population was small. To collect data, a drop and pick approach was relied upon whereby all the structured questionnaires were distributed to research participants who were the top officials of the insurance firms. The research findings portrayed that control activities had statistically significant influence on financial reporting quality for insurance firms listed at the NSE, Kenya which was direct. The results gotten from this study is of paramount importance to the top management for they will rely on the empirical model established which depicted that CA had significant causal influence on the financial reporting quality of insurance firms listed at the Nairobi securities exchange, Kenya to build confidence on the users of the insurance services by investing much on CA which in return will increase profitability of those organizations. Again, AKI as the surveillance body for insurance firms will take advantage of the results gotten for they will be able to develop Key Performance Indicators (KPI) which can be used as a benchmark to assess the financial stability of the members and by extension, develop respective attainable policies to mitigate the rate of insurance closures caused by reduced market share. If this is achieved, their membership increment is guaranteed and academicians will rely on the established empirical model to develop a theoretical foundation which explain the aspect of financial reporting quality of insurance firms listed at the Nairobi securities exchange, Kenya. Then by extension, the outcome will be used to identify other variables that may contribute to improvement of financial reporting quality of insurance firms which are not listed at the Nairobi securities exchange, Kenya.