EFFECT OF MANUFACTURED CAPITAL REPORTING ON THE FIRM VALUE OF LISTED COMPANIES IN KENYA
Dominic Abuga Omare - Kaimosi Friend University, School of Business and Economics, Kenya
Margaret Atieno Omondi - Kaimosi Friend University, School of Business and Economics, Kenya
Robert Ouma Opanyi - Kaimosi Friend University, School of Business and Economics, Kenya
ABSTRACT
The failure to provide financial and non-financial information has led to a lack of accountability and transparency, which has caused the firm value of many businesses to decline. In the modern business environment, the majority of prosperous companies understand that the primary goal of any enterprise is to use integrated reporting to generate firm value for customers, employees, and investors. More research on integrated reporting is necessary because many businesses are struggling financially even after implementing it. The study's objective was to determine the effect of manufactured capital reporting on the firm value of listed companies. The research was guided by trade-off theory. The study was guided by the research philosophy of positivism. The study design used was correlational. Twenty-three integrated reporting businesses listed on the Nairobi Securities Exchange made up the research population. Since the Nairobi Securities Exchange was the only stock market in Kenya legally obligated to prepare integrated reports under the company statute CAP 486, the selection of the listed companies there was justified. A census survey was employed. Secondary data was collected from the Nairobi Securities Exchange website from 2015 through 2022 for eight years. Panel summary statistics and panel data regressions were used to analyze the gathered data. The components of descriptive statistics included overall means, standard deviations, minimum and maximum ratios, the between-firm standard deviations, and the within-firm standard deviations. Panel data regressions included serial correlation tests, stationarity tests, Hausman tests, Breusch-Pagan Lagrange multiplier (LM) tests, and testparm tests. The Hausman test was used to select suitable models between the random effects (RE) and fixed effects (FE) for each variable modeling. According to the results of the STATA analysis, manufactured capital reporting has a positive and significant impact on listed businesses' firm value, and raising financial capital reporting raises the firm's overall value. However, firm value does not change much over time, while it is somewhat impacted by unnoticed firm-specific factors. Furthermore, implementing reporting standards only yields long-term benefits. This result supports previous studies by demonstrating that, with the right model, it is possible to pinpoint the precise variation in company value that unobserved firm-specific factors contribute to the idiosyncratic mistake.