Authors: Nelson M Waweru, George K. Riro
Page: 43
The main objective of this paper is to investigate the influence of corporate governance and firm specific characteristics on earnings management by Kenyan listed companies. Using panel data of 148-firm years obtained from the annual reports of the 37 companies listed on the Nairobi Stock Exchange (NSE), the study found that ownership structure and Board Composition were the main corporate governance characteristics influencing earnings management by Kenyan listed Companies.
Highly leveraged firms were found to be more likely to engage in earnings management. The results of this study are important to the Kenya Capital Markets Authority (KCMA) and other accounting regulators in Kenya, in the determination of whether to develop more corporate governance guidelines so as to improve the quality of information reported by Listed Companies. The study is also important to investors in developing countries, who must interpret financial statement numbers reported in the companies while making investment decisions. Furthermore, the study contributes to our understanding of how corporate governance influences financial reporting in developing economies, such as Kenya.
