Open AccessEffect of Board Diversity on Earnings quality of Non-Financial Firms Listed at the Nairobi Securities Exchange
Author(s) -
Sammy Thuo Kangea,
Tabitha Nasieku,
Willy Muturi
Publication year - 2022
Language(s) - English
DOI - 10.47260/jafb/1234
Subject(s) - earnings quality , accounting , moderation , business , diversity (politics) , shareholder , gender diversity , earnings , quality (philosophy) , finance , corporate governance , accrual , political science , statistics , philosophy , mathematics , epistemology , law
The study's main objective was to examine the relationship between board diversity and earnings quality of non-financial firms listed on the Nairobi Securities Exchange (NSE) and how ownership concentration acted as a moderator. As of December 31, 2020, the NSE had 39 non-financial firms listed. The secondary data was collected over a 13-year period (2008-2020). The study used a quantitative research design and positivist research philosophy. The data were analyzed using panel regression. It was put through diagnostic and specification tests. The study found that board diversity had a significant impact on non-financial firms' earnings quality, both with and without ownership concentration as a moderator. The moderator model outperformed the one without (ownership concentration). The study concludes that board diversity has a significant impact on non-financial firms traded on the NSE. The findings suggest that non-financial companies listed on the NSE should carefully examine the criteria used to define board diversity and its characteristics. Thus, boards will be more accountable to shareholders, reducing earnings manipulation.Keywords: Board diversity, Earnings quality, Non-financial firms.