Impact of regulatory reforms on compliance with mandatory disclosures by savings and credit co-operatives in Kenya

David Mutua Mathuva and H. Gin Chong

Journal of Financial Regulation and Compliance, 2018, vol. 26, issue 2, 246-270

Abstract: Purpose - This paper aims to utilize institutional theory to examine the impact of the 2008-2010 regulatory reforms on compliance with mandatory disclosures by savings and credit co-operatives (SACCOs) in Kenya. Design/methodology/approach - Two-stage least squares panel regression approach is utilized to analyse data covering 1,272 firm-year observations for 212 SACCOs over a six-year period, 2008-2013. An analysis of the pre- and post-regulation impacts on compliance with mandatory disclosure requirements is also performed. Findings - The results, which are in support of the institutional theory, reveal that licensed SACCOs engage in higher compliance with mandatory disclosures, and this improves from the pre- to the post-regulation period. The results show that SACCOs under inquiry engage in lower compliance with mandatory disclosure requirements, especially in the post-regulation period. The findings also reveal a significant and positive association between SACCO size, co-operative governance and compliance with mandatory disclosure requirements. Research limitations/implications - The study focuses on transition-level SACCOs in a single country. An extension into other jurisdictions with nascent, transitional and mature SACCOs would provide greater insights into the impact of disclosure regulation. Further, the study uses a self-constructed disclosure checklist which is subject to coding errors and biases. Practical implications - The findings highlight the need for SACCO regulators and accounting professional body to devise incentives to improve the level of compliance with required disclosures. Originality/value - The study contributes to the dearth of evidence on the efficacy of the introduction of mandatory disclosure requirements in a developing country where compliance is problematic because of difficulties with enforcement.

Keywords: Kenya; Regulation; Compliance; Mandatory disclosure; Savings and credit co-operatives (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfrcpp:jfrc-04-2016-0036

DOI: 10.1108/JFRC-04-2016-0036

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