Relationship between Voluntary Disclosure and Value of Listed Insurance Companies in Kenya

Abstract

Despite growth in presentation and disclosure requirements as enclosed in company and securities laws and international financial reporting standards (IFRS), mandatory disclosure requirements continue to provide the minimum information content required by various stakeholders of the firms for purpose of economic decision making. This paper aims to study whether voluntary disclosure of investment, financial, non-financial and governance information affect the value of insurance firms in Kenya. A quantitative research was adopted that analysed five-year data (2011 to 2015) of all listed insurance companies in Nairobi security exchange. The result revealed a positive and significant relationship between voluntary disclosure of the four explanatory variables and the value of insurance firms. Disclosure of investment policy has the strongest relationship while non-financial information has the weakest relationship to firm's value. Voluntary disclosures help in reducing information asymmetry between managers and external stakeholders and provide a more complete picture of firm's engagements and activities and more comprehensive information for purpose of firm valuation.