ENTERPRISE RISK MANAGEMENT AND THE QUALITY OF FINANCIAL REPORTING FOR COMMERCIAL BANKS LISTED AT THE NAIROBI SECURITIES EXCHANGE, KENYA

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.