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Publication date: 8 May 2017

David M. Mathuva, Josephat K. Mboya and James B. McFie

The purpose of this paper is to utilize legitimacy theory to test the association between the governance of credit unions and their social and environmental disclosure in a…

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Abstract

Purpose

The purpose of this paper is to utilize legitimacy theory to test the association between the governance of credit unions and their social and environmental disclosure in a developing country, Kenya. A further examination of institutional pressures due to regulatory forces on the association between co-operative governance and credit union social and environmental disclosure (CSED) is performed.

Design/methodology/approach

Using a sample comprising of 1,272 credit union observations over the period 2008-2013, panel OLS regressions are performed to establish the association between co-operative governance and CSED. A comparison of the pre- and post-regulatory influences on co-operative governance and CSED is also performed.

Findings

The findings, which are in support of both legitimacy and institutional theories, depict a positive and significant association between co-operative governance and CSED. The significance of the co-operative governance score improves from the pre-regulation period to the post-regulation period. Other significant variables influencing the volume of CSED by credit unions in Kenya include credit union size and financial performance as measured by the return on assets.

Research limitations/implications

The study examines CSED practices in a developing country and in organizations in a single sector. Further, CSED is measured using a self-constructed index with data being obtained from audited annual reports only.

Practical implications

The study highlights the need to develop CSED guidelines tailored for credit unions, and a focus on co-operative governance as a way of improving disclosure practices.

Originality/value

The study utilizes a sector-specific governance variable and a CSED index to examine the association between the two variables by credit unions in a developing country. The study also attempts to investigate the role of regulation on the association between co-operative governance and the volume of CSED.

Details

Journal of Applied Accounting Research, vol. 18 no. 2
Type: Research Article
ISSN: 0967-5426

Keywords

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Article
Publication date: 17 October 2016

David Mutua Mathuva, Elizabeth Wangui Muthuma and Josephat Mboya Kiweu

This paper aims to investigate the impact of name change, if any on the financial performance of deposit-taking savings and credit co-operatives (SACCOs) in a developing country…

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Abstract

Purpose

This paper aims to investigate the impact of name change, if any on the financial performance of deposit-taking savings and credit co-operatives (SACCOs) in a developing country characterized by a vibrant SACCO sector. Sparse studies exist on the impact of name changes on revenue-cost performance in mutual financial institutions such as SACCOs.

Design/methodology/approach

The study uses a standard event methodology over a six-year period (2008-2013) to investigate the impact of name change on the return on assets (ROA) and operating profit margin (OPM). The study then uses a panel regression method to study the impact of name change on ROA and OPM for a sample of 212 deposit-taking SACCOs over the period 2008-2013.

Findings

The results, which are robust for a variety of controls, provide evidence in support of a consistent positive association between name change and subsequent financial performance of deposit-taking SACCOs in Kenya. The positive impact of name change seems to be experienced about four years after the name change. The results reveal muted influence of regulation on name change and financial performance of SACCOs in Kenya.

Research limitations/implications

The study focuses solely on deposit-taking SACCOs in a developing country context over a six-year period only. Extending the time period and including a sample of control SACCOs operating purely back-office service activities would add power to the analyses.

Practical implications

The current study illustrates the contribution of name change on the financial performance of SACCOs in a developing country characterized by a vibrant SACCO sector. Overall, the results show that name change announcements signal an improvement in SACCOs’ future prospects.

Originality/value

This study provides empirical evidence on the contribution of name change announcements on the financial performance of SACCOs in a developing country context. The study adds to the sparse literature on the impact of name change on the financial performance of mutual financial institutions that are not listed on the securities exchange.

Details

Management Research Review, vol. 39 no. 10
Type: Research Article
ISSN: 2040-8269

Keywords

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