Profitability and Quality of Voluntary Disclosure among Commercial Banks in Kenya


  • Kimaru Thairu Kenyatta University
  • Ambrose Jagongo Kenyatta University
  • Lucy Wamugo Kenyatta University



The banking sector is featured and prioritized as one of the six key drivers of economic growth in Kenya’s Vision 2030 as it plays a central role in mobilizing resources. The bank operations transparency and information disclosure are amongst the key elements of governance as lack of it can gradually weaken the trust of all parties in the bank’s contracts. The specific objectives was to establish the effect of profitability on the quality of voluntary disclosure among Kenyan commercial banks. This study was guided by signalling theory. This study adopted positivistic philosophy and explanatory research design. The study period was between the years 2013- 2020 and 38 out of 41 commercial banks in Kenya licensed by the Central Bank of Kenya as at 2020 were selected as the sample using purposive sampling method. The data was extracted and compiled for evaluation from the financial statements using the document review guide. Descriptive and inferential statistics evaluated the data. Pearson correlation analysis was done to show correlation between variables and a panel regression model was used. The study found that profitability has a significant positive influence on quality of voluntary disclosure of commercial banks. It is recommended that banks should prioritize strategies that enhance their profitability. This is crucial for maintaining financial stability, as higher profitability allows for the accumulation of retained earnings, which in turn act as buffers to absorb potential losses.

Keywords: Profitability, Quality of Voluntary Disclosure & Commercial Banks

Author Biographies

Kimaru Thairu, Kenyatta University

Ph.D Candidate, Kenyatta University

Ambrose Jagongo , Kenyatta University

Department of Finance and Accounting, School of Business, Economics & Tourism, Kenyatta University

Lucy Wamugo, Kenyatta University

Department of Finance and Accounting, School of Business, Economics & Tourism, Kenyatta University


Abeywardana, N.L.E. & Panditharathna, K.M. (2016). The Extent and Determinants of Voluntary Disclosures in Annual Reports: Evidence from Banking and Finance Companies in Sri Lanka. Accounting and Finance Research, 5(4), 147-162.

Alqatameen, D. E., Alkhalaileh, M. A. A., & Dabaghia, M. N. (2020). Ownership Structure, Board Composition and Voluntary Disclosure by Non-financial firms listed In (ASE). International Business Research, 13(7), 93-107.

Aragón-Correa, J. A., Marcus, A., & Hurtado-Torres, N. (2016). The natural environmental strategies of international firms: old controversies and new evidence on performance and disclosure. Academy of Management Perspectives, 30(1), 24-39.

Bebchuk, L.A. & Weisbach, M.S. (2010). The state of corporate governance research. The Review of Financial Studies, 23(3), 939–961.

Bhuyan, M.S.S. (2018). Determinants and effects of voluntary disclosure with a focus on corporate governance and firm performance: Evidence from Bangladesh. Retrieved from Article/1367& context/theses.

Bidabad, B. & Sherafati, M. (2019). Bank Information Disclosure, Financial Transparency and Corporate Governance in Rastin Banking. International Journal of Shari'ah and Corporate Governance Research, 2(1) 1-13.

Dawd, I. (2018). Aggregate financial disclosure practice: evidence from the emerging capital market of Kuwait. Journal of Applied Accounting Research, 19(4), 626-647.

Dahiyat, A.A (2020). Determinants of Voluntary Disclosure Quality in Jordan: Evidence from Manufacturing Companies listed in Amman stock exchange. Academy of Accounting and Financial Journal, 24, 1-11.

Dhouibi, R., & Mamoghli, C. (2013). Determinants of Voluntary Disclosure in Tunisian Bank’s Reports. Research Journal of Finance and Accounting, 4(5), 80-94.

Elfeky, M.I (2017). The Extent of Voluntary Disclosure and its Determinants in Emerging Markets: Evidence from Egypt. The Journal of Finance and Data Science, 3, 45-59.

Ghabayen, M. A., Mohamad, N. R., & Ahmad, N. (2016). Board characteristics and corporate social responsibility disclosure in the Jordanian banks. Corporate Board: role, duties and composition, 12 (1-1), 84-100.

Habbash, M., Hussainey, K., & Ibrahim, A. (2016). The determinants of voluntary disclosure in Saudi Arabia: an empirical study. International Journal of Accounting, Auditing and Performance Evaluation, 12(3), 213-236.

Hawashe A. A (2019). Voluntary Disclosures in the Annual Report: Benefits and Costs, Preparers’ Views. International Journal of Research in Business Studies and Management, 6(1), 01-16

Islam, M.R., Bhuiyan, M.B. & Tuhin, M.H. (2014). The Association between Profitability and the Extent of Voluntary Disclosure of Financial Information in the Annual Reports: A Study on Listed Banks of Bangladesh. International Journal of Innovation and Scientific Research, 5(1), 87-96.

Jensen, M. C. and Meckling, W. H. (1976) Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure, Journal of Financial Economics, 3(4), 305-360.

Kanakriyah R, (2016). Voluntary Disclosure and Its Effect on the Quality of Accounting Information According to Users' Perspective in Jordan. American Journal of Business, Economics and Management, 4(6)134-146.

Khlifi, F., & Bouri, A. (2010). Corporate disclosure and firm characteristics: a puzzling relationship. Journal of Accounting, Business and Management, 17(1), 62-89.

Kisembe, A. & Muturi, W. (2018). Effect of Corporate Disclosures on the Financial Performance of Commercial Banks Listed In Nairobi Securities Exchange. Journal of Business and Management, 20(10), 08-16.

Koduah, P.A. (2020). Voluntary disclosure of listed banks operating in Ghana. International Journal of Accounting & Business Finance, 6(1), 1 – 23.

Leuz, C., & Wysocki, P. D. (2016). The economics of disclosure and financial reporting regulation: Evidence and suggestions for future research. Journal of Accounting Research, 54(2), 525-622.

Milad, I.A.A. & Bicer, A.A. (2020). The Association between Board of Directors Characteristics and the Level of Voluntary Disclosure: Evidence from Listed Banks in Borsa Istanbul. Management & Economics Research Journal. 2(1), 166-185.

Mugo N. W. (2014). The effect of voluntary disclosure on the financial performance of commercial banks in Kenya. Unpublished MBA project. University of Nairobi.

Nyasha, S. & Odhiambo, N.M (2012). Banking Sector Reforms in Kenya: Progress and Challenges. Corporate Ownership & Control, 10(1), 88-96.

Omar, B. & Simon, J. (2011), “Corporate aggregate disclosure practices in Jordan”, Advances in Accounting, 27(1), 166-186.

Omran, M. A., & Ramdhony, D. (2015). Theoretical perspectives on corporate social responsibility disclosure: a critical review. International Journal of Accounting and Financial Reporting, 5(2), 38-55.

Scaltrito, D. (2015). Voluntary disclosure in Italy Firm-specific determinants an empirical analysis of Italian listed companies. EuroMed Journal of Business, 11(2), 272-303

Van Zijl, W., Wöstmann, C., & Maroun, W. (2017). Strategy disclosures by listed financial services companies: Signalling theory, legitimacy theory and South African integrated reporting practices. South African Journal of Business Management, 48(3), 73-85.

Wanjau, B. M., Muturi, W. M., & Ngumi, P. (2018). Influence of Corporate Transparency Disclosures on Financial Performance of Listed Companies in East Africa. Asian Journal of Finance & Accounting, 10(1), 1-15.

Yusuf, .M.A., Adebayo, P.A. & Yusuf, R.N. (2018). Effect of Financial Performance on Voluntary Disclosure of Listed Financial Firms in Nigeria. International Journal of Economics, Commerce and Management, 4 (12), 81-99.




How to Cite

Thairu, K., Jagongo , A., & Wamugo, L. (2023). Profitability and Quality of Voluntary Disclosure among Commercial Banks in Kenya. Journal of Finance and Accounting, 7(11), 93–105.