The Effect of Corporate Governance Reporting on Tax Performance: Evidence from Kenyan Insurance Firms

Abstract

Purpose: This study examined the relationship between corporate governance reporting and tax performance among insurance firms in Kenya. Corporate governance reporting was essential for promoting transparency, accountability, and regulatory compliance, particularly in the financial sector.

Materials and Methods: The study employed a descriptive and correlational research design, analyzing secondary data from insurance firms operating in Kenya between 2020 and 2024. Data on corporate governance reporting was sourced from annual reports and sustainability disclosures, while tax performance indicators, including tax expense and effective tax rate, will be obtained from financial statements. A census sampling approach was used to include all eligible insurance firms with complete data. Panel data analysis was conducted using multiple regression models to evaluate the relationship while controlling for firm size, profitability, and leverage.

Findings: The study revealed a strong and statistically significant relationship between corporate governance indicators (Board Composition (B = 29.900, t = 125.048, p < 0.001), Audit Committee (B = 25.248, t = 103.143, p < 0.001), Audit Committee (B = 25.248, t = 103.143, p < 0.001) and Ethical Leadership (B = 19.820, t = 82.857, p < 0.001)) and tax performance among Kenyan insurance companies. Therefore, the study concluded that corporate governance reporting is a critical determinant of tax performance in the Kenyan insurance industry.

Unique Contribution to Theory, Practice and Policy: The study recommended that insurance firms should prioritize the professionalization and diversification of their boards so as to enhance tax performance through governance. The study also recommended for Audit Committees to be empowered through regular training, performance evaluations, and clear mandates to ensure rigorous financial scrutiny. Finally, the study recommended for Ethical Leadership to be embedded into organizational culture via transparent codes of conduct, whistleblower protections, and leadership accountability systems.