Title: Corporate governance, performance and employee disclosure in cooperatives: an empirical test of legitimacy and signalling theories

Authors: David Mathuva

Addresses: School of Business, College of Human Resource Development, Jomo Kenyatta University of Agriculture and Technology, P.O. Box 62000, 00200 Nairobi, Kenya

Abstract: The financial services industry has undergone various changes due to technological changes and deregulation. Cooperatives have responded to the changing competitive environment through expansion in operations and product diversification. As cooperatives become larger and more sophisticated, there has been a gradual shift from using volunteers for day-to-day operations to salaried employees. This study tests legitimacy and signalling theories by investigating the drivers of employee-related disclosures in savings and credit cooperatives (SACCOs) in Kenya. Employee-related information is obtained from audited annual reports of 212 SACCOs over the period 2008 to 2013. Ordinary least squares panel regression is used to analyse the drivers of employee disclosures. The results indicate that employee disclosures are driven by legitimacy and signalling factors. More specifically, the results reveal that employee disclosures are positively associated with corporate governance and asset quality. The results also reveal a negative association between return on assets and employee disclosures. This study adds onto the sparse literature on employee disclosures in cooperatives, which contribute greatly towards member welfare and economic development.

Keywords: savings and credit cooperatives; SACCOs; employee disclosure; corporate governance; legitimacy theory; signalling theory; Kenya; performance; financial services industry; ordinary least squares; OLS; asset quality; return on assets; ROA.

DOI: 10.1504/AJAAF.2015.073476

African Journal of Accounting, Auditing and Finance, 2015 Vol.4 No.3, pp.189 - 206

Received: 07 Aug 2015
Accepted: 08 Aug 2015

Published online: 09 Dec 2015 *

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