Relationship between the Chairman’s Statement and the Value Relevance of Annual Reports for Listed Banks in Kenya by Gitahi J., Dr. Memba F. , Dr. Nasieku T. , Scientific Research Journal (Scirj), Volume VI, Issue I, January 2018 Edition

Scirj Volume VI, Issue I, January 2018 Edition
ISSN: 2201-2796

Relationship between the Chairman’s Statement and the Value Relevance of Annual Reports for Listed Banks in Kenya

Gitahi J., Dr. Memba F. , Dr. Nasieku T.

Abstract: The purpose of this study was to explore whether there is a significant relationship between chairman’s statement, as a representative of non – financial disclosure otherwise called narrative accounting, and value relevance of annual reports for listed banks in Kenya. The study used content analysis and financial analysts’ perception to quantify sixty chairmen’s statements included in years 2010 to 2015 annual reports of ten banks listed on the Nairobi Securities Exchange (NSE) over the entire period. The study adopted a survey research design. Both primary data and secondary data were used. Primary data was obtained through survey questionnaires administered on respondents who were financial analysts at a total of sixty one firms (investment banks, stock brokers, fund managers and investment advisers) who were licensees of Kenya’s Capital Markets Authority (CMA) as at 30 April 2016. Secondary data was obtained from the corporate action register by NSE, NSE handbook, the daily market statistics from the NSE and annual reports released by the banks studied. Content analysis program ATLAS.ti 8, OneLook dictionary and Ms Excel 2007 were used for content analysis. Data analysis was carried out using SPSS version 20 and Stata 13. Descriptive and inferential statistics were used for analysis. Statistical F- test was used to test the significance of the independent variable on dependent variable. The results revealed that the chairman’s statement had a positive and significant relationship with value relevance of annual reports which was measured by the annual average market price per share. This study therefore concluded that inclusion of the chairman’s statement in annual reports is useful for investment decisions on the shares of listed banks. The study recommends an expanded role of the auditor in reviewing the chairman’s statement and other accounting narratives.

Reference this Paper: Relationship between the Chairman’s Statement and the Value Relevance of Annual Reports for Listed Banks in Kenya by Gitahi J., Dr. Memba F. , Dr. Nasieku T. published at: "Scientific Research Journal (Scirj), Volume VI, Issue I, January 2018 Edition, Page 5-15 ".

Search Terms: value relevance, chairman’s statement, annual reports, non-financial disclosures, narrative accounting

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