Abstract:
Abstract
Cash flow statement reporting is essential for evaluating a firm’s liquidity and overall financial
health. However, firms listed on the Nairobi Securities Exchange (NSE) have experienced a
decline in financial performance over recent years. This study aimed to examine the influence of
cash flow statement reporting on the financial performance of these firms. Grounded in
Conservative Accounting Theory, the research emphasized the role of cautious financial
reporting in protecting investors and stakeholders by mitigating risks related to
misrepresentation, fraudulent reporting, and earnings manipulationin cash flows. Adopting a
positivist paradigm, the study combined empirical analysis and theoretical insights. A descriptive
and cross-sectional research design was employed, utilizing secondary panel data from 49 firms
over the period 2018 to 2023. The findings revealed that cash flow statement reporting had a
weak and statistically insignificant influence on financial performance, accounting for only
3.37% of the variation in return on assets. Based on these results, it is recommended that listed
firms enhance the clarity, consistency, and strategic application of cash flow information to
support more informed decision-making. Furthermore, regulatory authorities such as the Capital
Markets Authority should improve oversight and establish clearer reporting guidelines to ensure
that cash flow statements deliver value beyond regulatory compliance.
