Financial Reporting Quality and Customers’ Value Creation in Selected Commercial Banks in Rwanda
Dr. NIYONZIMA, Theogene (PhD)
Adventist University of Central Africa (AUCA), Kigali, Rwanda
This study evaluated the contribution of financial reporting quality on customers’ value creation in Rwanda. The literature indicates that creating value for customers is important for sustainability of any kind of business. The study used ex-post factor and survey designs. The population of the study was 11 commercial banks licensed in Rwanda. Purposive sampling technique was used to select six banks which have data that covered a period of last years 18 years. Secondary data were extracted from past financial statements of the selected banks. Using total enumeration, primary data were collected from 148 staff of the six banks who work in the departments of accounting, finance and management, who are knowledgeable in financial reporting quality and value creation. Adapted and validated questionnaire was used in collecting primary data. The findings revealed that financial reporting quality had significant effect on customers’ value creation (Adj-R2=0.4338, F(5,102)=79.76, p <.01), validated by qualitative findings (Adj-R2=.435, F(8,133)=14.553, p <.05). The study concluded that financial reporting quality influences value creation for customers in selected commercial banks in Rwanda.
Keywords: bank, customer, financial information, financial reporting, value creation
Abdallah, W. & Majbour, A. (2015). Non-financial performance measures and the BSC of multinational companies with multi-cultural environment. Cross Cultural Management. An International Journal, 22(4), 594-607.
Abolaji, O.B. & Adeolu, O.O. (2015). Perceived effects of international financial reporting standards (IFRS) adoption on quality financial reporting of quoted companies in Nigeria. Research Journal of Finance and Accounting, 6(23), 1-8.
Ahmed.A. H., Abbod, M. & Al-Qadi, N. S. (2018). The impact of the quality of financial reporting on non-financial business performance and the role of organizations demographic’ attributes (type, size and experience). Academy of Accounting and Financial Studies Journal, 22(1), 1-18.
Bakutyte, S. & Grundey, D. (2012). Identifying the gap in value creation at universities: The consumer’s perspective. Interdisciplinary approach to economics and sociology, 5(1), 96-110.
Bertini, M. & Gourville, J.T. (2012). Pricing to create shared value. Harvard Business Review, 36(4), 23-34.
BNR. (2016). Monetary Policy And Financial Stability Report, (February), 1–68. Kigali: Rwanda National Bank (BNR).
Brad, L., Dobre. F, Turlea, C. & Brasoveanu, I. V. (2014). The impact of IFRS adoption in Romania upon the earnings management of the Bucharest Stock Exchange entities. Procedia Economics and Finance, 15, 871-876.
Brandthom, I. (2016). Inquiry into the causes and consequences of the collapse of listed retailers in Australia. Merbourne: SDA National Office.
Bruhn, A. (2015). Personal and social impacts of significant financial loss. Australia Journal of Management, 40(3), 399–402.
Chalaki, P., Didar, H. & Riahnezhad, M. (2012). Corporate governance attributes and financial reporting quality: Empirical evidence from Iran. International Journal of Business and Social Science, 3(15), 223-229.
Chari, L. & Mohanty, R. P. (2009). Understanding value creation: The shareholder value perspective. LBS Journal of Management & Research, 12-26.
Consolidated Amended Class Action Complain, Case1:11-cv-09297-KBF-Document 24 Filed (United States District Court Southern District of New York February 5, 2012).
Dawkins, C. (2014). The principle of good faith: Toward substantive stakeholder engagement. Journal of Business Ethics, 121(2), 283– 295.
El-Bodan, M., Aga, M. & Abu, A. A. (2017). Impact of corporate governance and external audit on earnings management. Evidence from the financial sector of United Arabs of Emirates (UAE). International Journal of Finance and Accounting, 6(6), 172-178.
Freeman, R. E. (2011). Some thoughts on the development of stakeholder theory. In R. Phillips (Ed.) Stakeholder Theory: 25 Years Later, 212-233. Cheltenham, UK: Edward Elgar Publishing.
Ghosh, D. & Anne, W. (2012). The effect of positive and negative financial and nonfinancial performance measures on analysts’ recommendations. Behavioral Research in Accounting, 24(2), 47-64.
Harrison, J. S. & Wicks, A. C. (2013). Stakeholder theory, value, and firm performance. Business Ethics Quarterly 23(1), 97-124.
Harrison, J. S., Bosse D. A. & Phillips, R. A. (2010). Managing for stakeholders, stakeholder utility functions, and competitive advantage. Strategic Management Journal 31(1), 58-74.
Hope, O., Thomas, W.B. & Vyas, D. (2013). Financial reporting quality of US private and public firms. The Accounting Review, 88(5), 1715-1742.
IMF. (2000). Rwanda: Recent economic development. IMF staff country report No 4, 1-118.
IMF. (2011). Inter-agency working group on the private investment and job creation pillar of the G20 multi-year action plan on development: “Indicators for measuring and maximizing economic value added and jobcreation arising from private sector investment. Report to the High-Level Development Working Group, 1-48.
IMF. (2011). Rwanda: Financial system stability assessment. Washington, D.C.: International Monetary Fund.
Ioana, D. & Adriana, T. (2013). New corporate reporting trends. Analysis on the evolution of integrated reporting. Annals of The University of Oradea, Economic Science Series, 22(1), 1221–1228.
Jones, T. M. & Felps, W. (2013). Shareholder wealth maximization and social welfare: a utilitarian critique. Business Ethics Quarterly, 23(1), 207-238.
Jones, T. M. & Felps, W. (2013). Stakeholder happiness enhancement: A neo-utilitarian objective for the modern corporation. Business Ethics Quarterly, 23(1), 349-379.
Lieberman, B. M. & Balasubramanian, N. (2007). Measuring value creation and its distribution among stakeholders of the firm. Symposium participants at the 2005 academy of management annual meeting and the 2006 Atlanta competitive advantage conference (pp.1-43). Los Angeles: UCLA Anderson School of Management.
Lorne, F. T. & Dilling, P. (2012). Creating values for sustainability: Stakeholders engagement, incentive alignment, and value currency. Economics Research International, 1-10.
Matthew, A. (2015). Impact of IFRS on financial reporting practices in Nigeria. Global Journal of contemporary Research in Accounting Auditing and Business Ethics, 1(1), 263-281.
Mauwa, J., Namusongeand, G.S. & Onyango, S. (2016). Effect of capital structure on financial performance of firms listed on the Rwanda Stock Exchange. European Journal of Business, Economics and Accountancy, 4(4), 1-11.
MINECOFIN. (2012). Rwanda financial sector strategy. Kigali: MINECOFIN.
Mitchell, R. K., Weaver, G. R., Agle, B. R., Bailey, A. D. & Carlson, J. (2016). Stakeholder agency and social welfare: Pluralism and decision making in the multi-objective corporation. Academy of Management Review, 1-46.
Olayinka, E. O., Olojede, P. & Olaoye, O. (2017). Value relevance of accounting data in the pre and post IFRS era: Evidence from Nigeria. International Journal of Finance and Accounting, 6(4), 95-103.
Oritsematosan, D. F. & Agwu M. E. (2014). A review of the effect of pricing strategies on the purchase of consumer goods. International Journal of Research in Management, Science & Technology, 2(2), 88-102.
Parrot, K. W., & Tierney, B. X. (2012). Integrated reporting, stakeholder engagement, and balanced investing at American Electric Power. Journal of Applied Corporate Finance, 24(2), 27–37.
Porter, M. & Mccreless, M. (2008). Rwanda: National economic transformation. Havard Business School Review, 9-706-491, 1-33.
Roddy, E. (2008). Corporate value creation: Customer value 2008 report. NY: CIMA.
Shanker, A. (2012). A customer value creation framework for businesses that generate revenue with open source software. Technology Innovation Management Review, 18-22.
Sharma, A., Krishnan, R. & Grewal, D. (2001). Value creation in markets. Industrial Marketing Management, 30(1), 391–402.
Simpson, S., Fischer, B. D. & Rhode, M. (2013). The conscious capitalism philosophy pay off: A qualitative and financial analysis of conscious capitalism corporations. Journal of Leadership, Accountability & Ethics, 10(4), 19–29.
Steen, A., McGrath, D. & Wong, A. (2016). Market failure, regulation and education of financial advisors. Australasian Accounting, Business and Finance Journal, 10(1), 1-17.
Verdin, P. & Tackx, K. (2015). Are you creating or capturing value? A dynamic framework for sustainable strategy. M-RCBG Associate Working Paper Series, No.36, 1-26. (2009). Rwanda: From post-conflict reconstruction to development.Washington: IDA.
Yamamoto, G. (2012). Understanding customer value concept: Key to success. Journal of Management Development, 19(1), 40-49.
Youngsu, L. (2014). Improving customer equity through value creation and value appropriation. Published PhD Thesis, Iowa State University, 1-108.