Compliance with Company and Allied Matters Act (CAMA) Evincing Financial Reporting Quality Impact on Performance of Small and Medium Enterprises (SMEs) in Nigeria

Abstract

This study is on the compliance with regulatory framework by Small and Medium Enterprises (SMEs) in Nigeria evincing financial reporting quality impact on firm performance. The design is an exploratory survey employing structural equation modelling in model specification. The empirical analysis of this study went through exploratory factor analysis (EFA) and then confirmed by confirmatory factor analysis (CFA). This study examined the impact of compliance with companies and allied Matters Act through financial reporting quality on performance of SMEs in Nigeria. The outcome revealed that the Financial Reporting Quality (exogenous variables) accounted for 39% while the Firm Performance (endogenous variables) accounted for 61% of the total variance. Thus, the Squared Multiple Correlations (SMC) fraction result confirmed that financial reporting quality has direct relationship with SMEs performance. Thus, Financial Reporting Quality (FRQ) impact on firm performance at (β=0.875) is significant. The study recommends that since FRQ is having a direct and significant relationship with SMEs performance the need for enforcing compliance to statutory and regulatory framework on SMEs by SMEDAN, CBN and all other stakeholders is necessary.

Keywords: compliance, reporting quality, performance, SMEs, Nigeria.

DOI: 10.7176/RJFA/10-6-08

Publication date:March 31^st 2019