Abstract:
The purpose of the study was to establish the effects of audit committee characteristics on
quality of financial reporting among firms listed in Nairobi Securities Exchange,
Kenya. The
study was guided by the agency theory. Explanatory research design was used. A survey of all
firms was done and only 46 firms were extracted because they were operating in NS
E at the
year 2014. This study utilized secondary data which was collected by use of a document
analysis guide. Data collected was analyzed by using both descriptive and inferential statistical
methods. The findings indicated that audit committee size has a positive and signifi
cant effect
on the quality of financial reporting (β1= 0.417, ρ<0.05). However, findi
ngs showed that audit
committee independence had a negative and significant effect on the quality of financi
al
reporting (β2=
-
0.478, ρ<0.05). The findings indicated that increase in audit committee size
increases quality of financial reporting. This implies that an increase in the audit com
mittee siz
e
enables the members to distribute the workload and dedicate more time and resou
rces in
monitoring. These findings will also have policy implications as regulators around in Ken
ya
continue to define and refine the desired characteristics and behavior of audit committees
.
Therefore, the findings of this study will ensure future platforms changes regarding
audit
committees are adequately informed
