Abstract:
Quality financial reports are very important in sound investment decisions making and thus the
reports need to be transparent, reliable and verifiable. However, regulators, investors, market
participants and scholars have voiced concerns about the accuracy of financial reporting
globally and even specifically in Kenya. Corporate governance systems like enterprise risk
management are essential in making sure that organizations remain open and highly
accountable. The purpose of the study was to examine the effect of enterprise risk management
on quality of financial reporting in commercial banks listed at the Nairobi Securities Exchange,
Kenya. The study was anchored on Enterprise Risk Management Theory. The study used
descriptive survey design. The target population was 11 commercial banks listed at the Nairobi
Securities Exchange, Kenya. The study adopted census method. Respondents consisted of 11
finance managers, internal auditors, company secretaries and risk and compliance officers of
the 11 listed commercial banks totaling to 44 respondents. A structured questionnaire was used
to obtain main data and a collection sheet to obtain the secondary data. Data was analyzed
using descriptive statistics and linear regression analysis through SPSS 30. The study found out
International Journal of Economics, Commerce and Management, United Kingdom
that the independent variable negatively correlated with the dependent variable. Enterprise risk
management (r=-0.635) with p value of 0.000. The study recommends that regulatory bodies
should encourage periodical risk management audits to evaluate the maturity and effectiveness
of risk management systems within financial institutions. Central bank of Kenya and capital
market authorities should periodically review and update governance and reporting regulations
to reflect emerging risks and global best practices.
