Effect Of Audit Committee Attributes On Corporate Risk Disclosure. Of Firms Listed In Nairobi Security Exchange, Kenya


Stephen Kimutai Chelogoi ,

Download Full PDF Pages: 09-19 | Views: 1100 | Downloads: 240 | DOI: 10.5281/zenodo.3455974

Volume 7 - July 2018 (07)


the main purpose of the study paper was to determine the effect of audit committee characteristics on firm risk disclosure. Agency Theory informed the study. This study adopted a correlation research design. The target population for the study comprised of the 61 listed firms at Nairobi Securities Exchange(NSE) Census technique; was used in the study since it only captured all the 45 firms that had consistently been operating at the NSE for the past 8 years from 2005-2012 irrespective of their industry or market segment. This study utilized secondary data, and data were collected by use of content analysis. A document analysis guide was prepared to enable and guide the collection of data. Data collected was analyzed by use of descriptive statistics, for example, mean, and standard deviations were used, and inferential statistics which included Pearson correlation tested hypothesis and data were presented using tables. The results were likely to be of interest to investors because it provided a basis for evaluating a company’s risk and risk management strategies contained in the annual reports


Audit Committee Characteristics, Audit Committee. Quantity Of Risk Information Disclosed


          i.        Abraham, S. and Cox, P.(2007), “Analyzing the determinants of narrative risk information in UK FTSE 100 annual reports”, The British Accounting Review, Vol. 39(3), pp.227-248.

ii.      Adams, C.A., Hill, W. and Roberts, C.B.(1998), “Corporate social reporting practices in Western Europe: Legitimating corporate behavior?”, British Accounting Review, Vol. 30, pp.1-21

iii.    Adams, M. and Hossain, M.(1998), “Managerial discretion and voluntary disclosure: Evidence from the New Zealand life insurance industry”, Journal of Accounting and Public Policy, Vol.17(2), pp.245-281.

iv.     Ahmed, K. and Courtis, K. (1999), “Associations between corporate characteristics and disclosure levels in annual reports: a meta-analysis”, The British Accounting Review, Vol.31(1), pp.35-61.

v.       Amran, A., Bin, A.M.R. and Hassan, B.C.M. (2009), “Risk reporting: an exploratory study on risk management disclosures in Malaysian annual reports”, Managerial Auditing Journal, Vol. 24(1), pp.39-57.

vi.     Barako, D.G.(2007), “Determinants of voluntary disclosures in Kenyan companies annual reports”, African Journal of Business Management, Vol. 1(5), pp.113-128.

vii.   Beretta,S. and Bozzolan, S. (2004), “A framework for the analysis of firm communication”, International Journal of Accounting, Vol. 39(3), pp.265-288.

viii. Carpenter, V. and Feroz, F. (1992), “GAAP as a symbol of legitimacy: New York state’s decision to adopt generally accepted accounting principles”, Accounting Organizations and Society, Vol. 17(7), pp.613-643.

ix.     Cooke, T.E.(1989), “Disclosure in the corporate annual report of Swedish companies”, Accounting and Business Research, Vol. 19(74), pp.113-124.

x.       Crouhy, M., Galai, D. and Mark, R. (2006), “The essentials of risk management”, McGraw Hill, New York.

xi.     Deumes, R. and Knechel, R.W. (2008), “Economic incentives for voluntary reporting on internal risk management and control systems”, Auditing: a Journal of Practice and Theory, Vol. 27(1), pp.35-66.

xii.   Dickinson, G. (2001), “Enterprise risk management: Its origins and conceptual foundation”, Geneva papers on Risk and Insurance”, Vol. 26(3), pp.360-366.

xiii. Doherty, A.N.(1985), “Corporate Risk Management: A Financial Exposition”, McGraw-Hill, London.

xiv. Fraser, J. and Simkins, B.(2007), “The common misconceptions about enterprise risk management”, Journal of Applied Corporate Finance, Vol.19(4), pp.75-81.

xv.   Healy, P. and Palepu, K. (2001), “Information asymmetry, corporate disclosure, and the capital markets: a review of the empirical disclosure literature”, Journal of Accounting and Economics, Vol. 31(1), pp.405-440.

xvi. Hussainey, K. and Al-Najjar, B. (2011), “Future oriented narrative reporting determinants and use”, Journal of Applied Accounting Research, Vol. 12(2), pp.123-138.

xvii.                       Hussainey, K. and Elzahar, H. (2012), “Determinants of narrative risk disclosures in UK interim reports”, The Journal of Risk Finance, Vol. 13(2), pp.133-137.

xviii.                     IASB (2001), Framework for the Preparation and Presentation of Financial Statements, International Accounting Standards Board.

xix. IASB (2003), IAS32 Financial Instruments: Presentation, International Accounting Standards Board.

xx.   IASB (2005), IFRS7 Financial Instruments: Disclosures, International Accounting Standards Board.

xxi. IASB (2007), IAS1 Presentation of Financial Statements, International Accounting Standards Board.

xxii.                       IASB (2009a), IAS39 Financial Instruments: Recognition and Measurement, International Accounting Standards Board.

xxiii.                     IASB (2009b), IAS37 Provisions, Contingent Liabilities and Contingent Assets, International Accounting Standards Board.

xxiv.                      ICAEW (2002), No Surprises: The Case for Better Risk Reporting, Institute of Chartered Accountants in England and Wales, London.

xxv.                        Inchausti, B. (1997), “The influence of company characteristics and accounting regulation on information disclosed by Spanish firms”, The European accounting Review, Vol. 6(1), pp.45-68.

xxvi.                      Ismail, R.F., Arshad, R., and Othman, S. (2012), “The influence of voluntary risk disclosure on firms’ market value”, 3rd ICBER Proceedings.

xxvii.                    Jensen, M. and Meckling, W. (1976), “Theory of the firm: managerial behavior,agency costs and ownership structure”, Journal of Financial Economics, Vol. 3, pp.305-360.

xxviii.                  Johansson, S. and Thornberg, S. (2011), “Risk disclosures in listed companies: Exploring the Swedish context”, Unpublished Masters Thesis, Kristianstad University, Sweden.

xxix.                      Kombo, D.K. and Tromp, L.A. (2006), “Proposal and ProposalWriting”, Paulines Publications Africa, Nairobi.

xxx.                        Krippendorff, K. (2004), “Content analysis: An introduction to its methodology”,(2ndEdition),Sage, London.

xxxi.                      Liebenberg, P.A. and Hoyt, E.R. (2003), “The determinants of enterprise risk management: Evidence from the appointment of Chief Risk Officer”, Risk Management and Insurance Review, Vol. 6(1), pp.37-52.

xxxii.                    Linsley, P. and Shrives, P. (2000), “Risk management and reporting risk in the UK”, Journal of Risk, Vol. 3(1), pp.115-129.

xxxiii.                  Linsley, P.M. and Shrives, P.J. (2006), “Risk reporting: a study of risk disclosures in the annual reports of UK companies”, British Accounting Review, Vol. 38(4), pp.387-404.

xxxiv.                  Linsley, P.M., Shrives, P.J., and Crumpton,M.(2003), “Risk disclosure practices: A study of UK and Canadian banks. Working Paper.

xxxv.                    Mohobbot, A. (2005), “Corporate risk reporting practices in annual reports of Japanese companies”, Japanese Journal of Accounting, Vol. 16(1), pp.113-133.

xxxvi.                  Morris, R.D., (1987), “Signaling, agency theory and accounting policy choice”, Accounting and Business Research, Vol. 18(69), pp.47-56.

xxxvii.                Nan Jiang, (2009), “Examining risk management and risk disclosures practices in UK public companies”, Unpublished Masters Thesis, University of Nottingham.

xxxviii.              Nocco, W.B. and Stultz, M.R. (2006), “Enterprise risk management: Theory and practice”,Journal of Applied Corporate Finance, Vol. 18(4), pp.8-20.

xxxix.                  Oliveira, J., Rodrigues, L.L. and Craig, R. (2011), “Risk related disclosures by non-finance companies: Portuguese practices and disclosure characteristics”, Managerial Auditing Journal, Vol. 26(9), pp.817-839.

xl.     Onen, D. and Oso, W.Y. (2005), “A handbook for Beginning Researchers”.Options press and publishers. Kisumu.

xli.   Rajab, B. and Handler-Schachler, M. (2009), “Corporate risk disclosure by UK firms: Trends and determinants”, World Review of Entrepreneurship, Management and Sustainable Development, Vol. 5(3), pp.224-243.

xlii. Samaha, K. (2010), “Do board independence and audit committees motivate disclosure on different Audit committee characteristics information categories in the annual reports in developing countries”, International Research Journal of Finance and Economics, Issue 57, pp.207-225.

xliii.                       Saunders, M., Lewis, P. and Thornhil, A.(2003),” Research Methods for Business students” (3rdEdition), Prentice-Hall.

xliv.                       World Bank (2001), “Report on the Observance of Standards and Codes (ROSC) Kenya”.

xlv. Yuen, C.Y.D., Ming, L.,Xu Zhang, Chang Lu (2009), “A case of voluntary disclosures by Chinese enterprises”, Asian Journal of Finance and Accounting, Vol. 1(2), pp.118-145.

Cite this Article: