MODERATING EFFECT OF FINANCIAL REPORTING ON THE RELATIONSHIP BETWEEN GOVERNANCE AND PERFORMANCE OF NATIONAL GOVERNMENT CONSTITUENCIES DEVELOPMENT FUNDS IN KENYA

Abstract:

The performance of most National Government-Constituencies Development Funds (NG-CDFs) has been poor and the role of financial reporting on the relationship between governance and NG-CDFs performance has been lacking. The study sought to establish the moderating effect of financial reporting on the relationship between governance and performance of NG-CDFs in Kenya. A census survey was carried out on all the 290 NG-CDFs performance in Kenya. A positivistic research philosophy and a descriptive cross-sectional survey design were used. Structured and unstructured questionnaires were used to collect primary data. Secondary data from 2014 to 2018 was obtained from the National Treasury, Kenya National Bureau of Statistics, the General Auditor’s reports and NG-CDF website. Stepwise analysis was used to test the hypothesis at 95 percent confidence level. From the findings, financial reporting as a moderating variable had a significant effect on the relationship between governance and NG-CDFs performance. The study benefits policy makers in the NG-CDF regarding governance and financial reporting. The study suggests to the managerial practitioners especially in NG-CDF to consider strengthening governance interactions with financial reporting to enhance performance. The study made contributions to knowledge in the use of DEA technique to measure performance in NG-CDFs. Future studies need to use similar variables in the other funds such as youth fund, women fund among others to test similar hypothesis.