Abstract:
Despite disclosure being widely regarded as a necessary condition for market discipline, the determinants of disclosure in the financial sector are relatively unknown. Concerns have been raised regarding the quality and level of disclosure by savings and credit co-operative societies (SACCOs) in Kenya. This study sought to investigate the determinants of the level of disclosure by deposit-taking SACCOs in Kenya. The study utilized a descriptive research design. Using a disclosure index comprising of 112 information items, the study employed content analysis of audited annual reports to establish the level of disclosures by 202 deposit-taking SACCOs in Kenya over the period 2008-2013. To corroborate the findings, semi-structured questionnaires wereutilized. Data were analyzed usingSPSS software version 24.Correlation and multivariate fixed effects panel regression approaches were used to test six hypotheses.The findings revealedan average disclosure level of 60.1%, with SACCOs providing more financial disclosures at an average of81.9%compared to general disclosures at an average of 60.4% and social and environmental disclosuresat an average of 29.5%.The findings revealed that the level of disclosure by SACCOs is significantly and positivelyinfluenced by total asset value, governance score and the ratio of non-performing to gross loans at the 0.05 level of significance.The findings revealed thatSACCOs audited by the government auditor had lower disclosure levels. The findings illustrated a moderating influence of the ICPAK guidelines on the relationship between asset value, governance score, non-performing to gross loans and the level of disclosure. This showed that whereas the regulator-driven ICPAK guidelines improved disclosure levels by SACCOs significantly, the benefits appeared varied across SACCOs. To improve the level of disclosure, the study highlighted the need to create awareness for SACCOs to embrace social and environmental disclosure practices. The findings highlightedthe need by SACCOs to devote resources towards improving the level of disclosure. In addition, the results revealed the need for SACCOsto adopt best practice governance practices to improve their transparency and accountability. Since the study relied extensively on disclosures provided by SACCOs in the audited annual reports, an examination of disclosures in other media and in a larger number of co-operatives is warranted. Further research can also establish whether the determinants of disclosure would differ if a weighted disclosure index was used to determine the level of disclosure.
