EFFECT OF DISCLOSURE OF FINANCIALS ON FINANCIAL PERFORMANCE OF PRIVATE COMPANIES IN RWANDA: A CASE STUDY OF HORIZON CONSTRUCTION LIMITED

Abstract

This study investigated the effect of the disclosure of financials on the financial performance of private companies in Rwanda, with a specific focus on the case of Horizon Construction Ltd. Financial transparency and reporting practices play a crucial role in the corporate governance and overall financial health of businesses. This research analyzed the impact of financial disclosure practices on the performance of Horizon Construction Ltd and, by extension, private companies in the Rwandan context. The theoretical foundations offer a framework for comprehending the factors that contribute to these outcomes, including agency theory, signaling theory, and stakeholder theory. These theories collectively shed light on the complex relationship between financial reporting methods and financial success. A descriptive survey strategy was utilized in this study, which involved the use of quantitative questionnaires and qualitative interviews with both consumers and bank staff. This approach aimed to provide a thorough comprehension of the relationship between technology adoption and customer happiness. The research employed a descriptive survey methodology. The research style employed in this study was a mixed methods approach, incorporating the gathering and examination of primary data, supplemented by the use of secondary data. This methodology was utilized to elucidate the connections between the variables being examined. The sample size consisted of 389 participants. The method of selection utilized in this study was stratified sampling. The study utilized a sample size of 80 respondents that were selected from the target group. The primary method employed for data collection involved the utilization of questionnaires, wherein participants were requested to score their responses on a five-point Likert scale. It was important to note that the questionnaires did not provide an opportunity for participants to provide any free-form remarks. The collection of secondary data involved sourcing information from several channels, wherein participants were requested to complete a questionnaire by supplying the requisite details. The forthcoming pilot study employed a total of ten individuals. Cronbach's Alpha was employed to assess the degree of reliability. The assessment of the instruments' validity was conducted by a panel of research experts with expertise in the field of project management. The results of the data analysis were presented using frequency tables, descriptive statistics, and regression analysis in SPSS (version 23). The data was subjected to analysis using both qualitative and quantitative methodologies. The model shows that financial disclosure improves financial performance significantly (B = 0.760, t = 4.026, p 0.001). This suggests that, after accounting for the constant, an increase of one unit in financial disclosure is associated with an improvement of 0.760 units in financial performance on average. Disclosure of financials is a reasonably strong predictor of financial performance, according to the standardized coefficient (Beta = 0.422). Although many people agree that being transparent with investors is important for good corporate governance and accountability, the effect of financial disclosure on a company's bottom line can vary greatly depending on factors such as its size, sector, and degree of adherence to accounting rules. Compliance with local rules, stakeholder sophistication, and the company's capacity to properly communicate financial information may all moderate the correlation between financial transparency and financial performance in Rwanda. To gain a more nuanced and context-specific knowledge of the influence of financial disclosure on financial performance for private enterprises in Rwanda, it may be important to do additional study on these issues. Keywords: Disclosure of Financials, Financial Performance, Private Companies, Rwanda, Horizon Construction Ltd CITATION : Ngezahayo, B., & Osiemo, A. K. (2023). Effect of disclosure of financials on financial performance of private companies in Rwanda: A case study of Horizon Construction Limited. The Strategic Journal of Business & Change Management, 10 (4), 709 – 727. http://dx.doi.org/10.61426/sjbcm.v10i4.2782.