Effect of Integrated Financial Reporting on the Value of Firms listed at the Nairobi Securities Exchange

Abstract

This study investigated the influence of IFR on the value of firms listed at the Nairobi Stock Exchange (NSE). The study used financial capital reporting, manufactured capital reporting, intellectual capital reporting, human capital reporting, social, and environmental capital reporting as independent variables, firm size as a moderating variable, and firm value and dependent variable. The study used both primary data and secondary data. The secondary data was obtained from individual firms’ annual financial reports and websites then captured in a data collection sheet. Data was obtained from a total of 64 firms listed at the NSE with data ranging from January 1, 2016, to December 31, 2020. Multiple linear regression model was used to test the combined effect on the dependent variable. The study found that there was a positive and significant relationship between financial capital reporting and the value of firms listed at the NSE; there was insignificant relationship between manufactured capital reporting and the value of firms listed at the NSE; intellectual capital reporting had a positive and significant effect on the value of firms listed at the NSE; there existed a positive and significant relationship between human capital reporting and value of firms listed at the NSE; environmental capital reporting had insignificant effect on the value of firms listed at the NSE; social capital reporting had insignificant effect on the value of firms listed at the NSE. The study further established that firm size had moderating effect on the relationship between integrated financial reporting and the value of companies listed at the NSE. The study concludes that integrated financial reporting has a positive relationship with the value of firms listed at the NSE. The study thus recommended that the management of firms listed at the NSE should strive to adopt the various integrated financial reporting in enhancing the value of their firms.