Corporate Disclosures and Financial Performance of Manufacturing and Allied Firms Listed at the Nairobi Securities Exchange, Kenya

Abstract

This study sought to establish how corporate disclosures affect the financial performance of manufacturing firms listed on the Nairobi Securities Exchange. The study was hinged on the Agency the Stakeholder theories whilst deploying both descriptive and correlational research designs. The study used self-administered close-ended questionnaires to collect data. Data analysis was undertaken using the STATA software. The analysis involved diagnostic tests of normality and multi collinearity to ensure that the variables conform to the assumptions of multiple regression. Correlation analysis showed how strongly the variables under investigation are related and regression analysis tested the study hypotheses. The study findings revealed a positive and significant relationship between all four disclosure variables and financial performance. Research findings further indicated that at 5 percent significance level, Risk disclosure (Sig. = 0.006), Financial disclosure (Sig. = 0.030), Corporate Governance disclosure (Sig. = 0.015) and Corporate Social Responsibility disclosure (Sig. = 0.005) have a significant effect on Financial Performance. These findings suggest that increasing the quality and quantity of these disclosures can lead to improved financial performance. The study recommends that manufacturing firms listed on the NSE should enhance their financial and risk disclosures, strengthen corporate governance and invest in CSR initiatives to improve transparency, investor confidence, and in the long run, financial performance.