Effect of Board Diversity on Earnings quality of Non-Financial Firms Listed at the Nairobi Securities Exchange

Abstract

Abstract The study's main objective was to examine the relationship between board diversity and earnings quality of non-financial firms listed on the Nairobi Securities Exchange (NSE) and how ownership concentration acted as a moderator. As of December 31, 2020, the NSE had 39 non-financial firms listed. The secondary data was collected over a 13-year period (2008-2020). The study used a quantitative research design and positivist research philosophy. The data were analyzed using panel regression. It was put through diagnostic and specification tests. The study found that board diversity had a significant impact on non-financial firms' earnings quality, both with and without ownership concentration as a moderator. The moderator model outperformed the one without (ownership concentration). The study concludes that board diversity has a significant impact on non-financial firms traded on the NSE. The findings suggest that non-financial companies listed on the NSE should carefully examine the criteria used to define board diversity and its characteristics. Thus, boards will be more accountable to shareholders, reducing earnings manipulation. Keywords: Board diversity, Earnings quality, Non-financial firms.