Effect of Internet Technology on the relationship between Corporate Voluntary Disclosure and Firm Value of Listed Companies at the Nairobi Securities Exchange

Abstract

Transparency and accountability has become critical for the company’s success and value creation.

What was previously a mere obligatory function of the annual general meeting, has for the past decade, become an activity of distinguished priority for most top executives. Internet has triggered a revolution in the area of transparency. Internet as a medium for the disclosure of corporate information creates a new corporate reporting environment that offers a platform for managerial stewardship and disclosure management. This paper examines the moderating role of internet technology on the relationship between corporate voluntary disclosure and firm value of listed companies at the Nairobi Security Exchange in Kenya. A census survey was carried out and of the 66 firms that were targeted, 56 were analysed. The study relied on disclosure index procedures to assess the level of corporate voluntary disclosure in the annual reports (2010-2019) of 56 listed companies. The moderating effect on the relationship between independent and dependent was tested using panel data models. The finding showed that internet technology as moderating affects the relation between corporate voluntary disclosure and firm value (measured using return on assets) and, has no effect on relationship between corporate voluntary disclosure and firm value (measured using Tobin Q). In general the finding shows mixed results in terms moderating role of internet technology on relationship between corporate voluntary disclosure and firm value. The finding are helpful to policy maker and prepares of corporate reports to establish disclosure strategy to prioritize investor relations through website to level the playing field on the security market. The inconsistence results of the moderating role of internet technology on the relationship between corporate voluntary disclosure and return on assets and Tobin Q ratio as measure of firm value, may be due the fact that theoretical each measures express different meanings. However, future researchers may explore the possible causes of differences and how to deal with inconsistence in results with respect to return on assets and Tobin Q.  

Keywords: Internet technology, corporate voluntary disclosure, firm value, information asymmetry