MODERATING EFFECT OF FINANCIAL REPORTING ON THE RELATIONSHIP BETWEEN GOVERNANCE AND PERFORMANCE OF NATIONAL GOVERNMENT CONSTITUENCIES DEVELOPMENT FUNDS IN KENYA

Abstract

The performance of most National Government-Constituencies Development
Funds (NG-CDFs) has been poor and the role of financial reporting on the
relationship between governance and NG-CDFs performance has been lacking.
The study sought to establish the moderating effect of financial reporting on the
relationship between governance and performance of NG-CDFs in Kenya. A
census survey was carried out on all the 290 NG-CDFs performance in Kenya. A
positivistic research philosophy and a descriptive cross-sectional survey design
were used. Structured and unstructured questionnaires were used to collect
primary data. Secondary data from 2014 to 2018 was obtained from the National
Treasury, Kenya National Bureau of Statistics, the General Auditor’s reports
and NG-CDF website. Stepwise analysis was used to test the hypothesis at 95
percent confidence level. From the findings, financial reporting as a moderating
variable had a significant effect on the relationship between governance and NGCDFs
performance. The study benefits policy makers in the NG-CDF regarding
governance and financial reporting. The study suggests to the managerial
practitioners especially in NG-CDF to consider strengthening governance
interactions with financial reporting to enhance performance. The study made
contributions to knowledge in the use of DEA technique to measure performance
in NG-CDFs. Future studies need to use similar variables in the other funds such
as youth fund, women fund among others to test similar hypothesis.