The Effects of Corporate Governance on the Quality of Financial Reporting: the case of some Selected Private Commercial Banks
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Date
2026-02-01
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A.A.U
Abstract
This paper examines how the procedures of corporate governance have effects on the financial reporting in the Ethiopian private commercial banks, namely, Bank of Abyssinia,Awash Bank, and Dashen Bank. The quantitative research methodology was used to collect primary data by way of administration of structured questionnaires to 136 members of the finance department leading to a response rate of 88 percent. The study has considered five key variables of governance, including audit committees, board size, board independence,disclosure transparency, and the frequency of the board meetings. The outcomes of the multiple regression analysis revealed that the factors that positively influence the quality of financial reporting are, in turn, audit committees (b = 0.359, p 0.001), board independence (b = 0.314, p 0.001) and disclosure transparency (b = 0.278, p = 0.003), which explain 78.9 percent of the changes in the quality of financial reporting (R2 = 0.789). On the other hand, the board size and meeting frequency did not have any significant impact (p 0.05),which means that the structural governance issues override the procedural ones. The model was tested on the basis of diagnostic assessments, and there were no violations of the conditions of regression. The findings underscore the importance of Ethiopian banks focusing on good audit control, true board independence, and enhanced transparency and not the token compliance. The recommendations include the need to have financial
competence in audit committees, the improvement of the standard of independence, and the standard of disclosure that is tiered. This research contributes to the existing body on corporate governance in emerging markets by determining situation-dependent variables that affect the quality of financial reporting, which could be useful to regulators and bank management that may want to strengthen accountability and stakeholders confidence.
Keywords Corporate governance, financial reporting quality, audit committees, board indep endence, Ethiopian banks.