Firm Size Effect and Sustainability Reporting amongst Firms Listed at Nairobi Securities Exchange, Kenya

Abstract

Globally, there is huge concern about the negative effect of social and environmental issues because firms solely focus on the financial perspectives. These concerns are growing in the current age with the huge effect experienced by global warming on the sustainability of the planet and its resources. The purpose of this study was to examine the influence of firm size on sustainability reporting from the perspective of firms published on the security exchange system in Nairobi. This study was guided by four key objectives: Analyze the effect of market capitalization on sustainability reporting in the context of companies listed at Nairobi Exchange market, Kenya, analyze the effect of sales value on sustainability reporting in the context of companies listed at Nairobi Exchange market, Kenya and analyze the effect of net assets on sustainability reporting in the context of companies listed at Nairobi Exchange market, Kenya. The study was underpinned by the agency theory, signaling theory and legitimacy theory. This research utilized descriptive research design, which accommodated quantitative research methodologies. In the context of firms listed on the NSE, the entire population consisting of the 64 companies listed on the Nairobi Securities Exchange was the basis of the research. The stratified sampling technique was used to collect primary data using a semi- structured questionnaire. The validity of the data was assessed through content validity and criterion validity, while reliability was evaluated using Cronbach alpha coefficients to measure internal consistency of the variable under study. The data was analyzed using SPSS, employing descriptive and inferential statistics, which were presented in the form of tables, frequencies, percentages, means and standard deviation. Ethical considerations were also taken into perspective. The findings of the results revealed a positive and statistically significant relationship between sustainability reporting and firm size. Firms with high market capitalization, sales value and high net assets were found to significantly influence sustainability reporting. The study recommends that firms invest in high market capitalization, sales value and net assets and adopt strategies that align with the modern sustainability demands. The findings are expected to benefit various shareholders, firms, academicians and regulators in understanding the role of firm size effect in enhancing sustainability reporting