Impact of Financial Reporting Transparency on Investor Decision-Making

Abstract

Purpose: The aim of the study was to assess the impact of financial reporting transparency on investor decision-making in Kenya. Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries. Findings: In summary, financial reporting transparency significantly impacts investor decisions. It boosts confidence, reduces information gaps, lowers capital costs, enhances stock liquidity, and encourages long-term investments. Moreover, it improves risk assessment, ensures regulatory compliance, and safeguards investor interests. Implications to Theory, Practice and Policy:  Information asymmetry theory, agency theory and behavioral finance theory may be use to anchor future studies on assessing the impact of financial reporting transparency on investor decision-making in Kenya. Companies should recognize the potential variation in the impact of financial reporting transparency across industries. Policymakers should work towards promoting the adoption of global reporting standards that encourage consistent and transparent financial disclosures.