DETERMINANTS OF READABILITY OF FINANCIAL STATEMENTS IN KENYA
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Date
2022
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Publisher
University of Oum El Bouaghi
Abstract
The current study set out to investigate the determinants of readability of
financial statements of Kenyan-listed firms. A deductive approach was
employed and data was collected from a sample of 59 companies listed in
the NSE in a census study over 5 years between years 2014 to 2018.
Prais Winsten regression model was employed and the findings indicated
that file size had a significant and negative effect on the readability of
financial statements in Kenyan listed firms. The implication is that largesize
financial statements are more difficult to read than smaller ones. This
finding is consistent with reality since it will take less time to read smallsized
financial statements than larger ones. Preparers of financial
statements who are the firm managers should thus be careful about this
finding. Regulatory authorities should develop policies that encourage the
production of smaller volume financial statements to enhance their
readability by the end-users. The current study is the first in East Africa
since there has been no study on the readability of financial statements
that have employed readability indices and that has regressed
determinants against the readability of financial statements in this region.
Description
Keywords
Readability, Financial Statements, Firm Characteristics