Vous êtes sur la page 1sur 39

PDFlib PLOP: PDF Linearization, Optimization, Protection Page inserted by evaluation version www.pdflib.com sales@pdflib.

com

Journal of International Financial Management and Accounting 14:1 2003

Determinants of Internet Financial Reporting by New Zealand Companies


Peter Oyelere
Sultan Qaboos University, PO Box 20, Al Khod PC 123, Oman email: petero@squ.edu.com

Fawzi Laswad
Massey University, New Zealand

Richard Fisher
Lincoln University, New Zealand

Abstract
The development of the Internet as a global medium for the dissemination of corporate financial information creates a new reporting environment. Extensive literature examines the determinants of voluntary financial reporting through traditional media such as printbased annual reports. This paper extends this literature by examining the voluntary adoption of the Internet as a medium for transmitting financial reports and determinants of such voluntary practice by New Zealand companies. The results indicate that some determinants of traditional financial reportingfirm size, liquidity, industrial sector and spread of shareholdingare determinants of voluntary adoption of Internet financial reporting (IFR). However, other firm characteristics, such as leverage, profitability and internationalization do not explain the choice to use the Internet as a medium for corporate financial reporting.

1. Introduction Internet financial reporting (IFR) is a recent but fast-growing phenomenon. Many companies worldwide publish their corporate financial information on the Internet. Financial information provided on the web includes comprehensive sets of financial statements, including footnotes; partial sets of financial statements; and/or financial highlights that may include summary financial statements or extracts from such statements. Recent studies document the practice of such reporting among companies in a number of countries.1 This practice is expected to grow to the extent that financial reporting in the near future will move entirely from the current primarily print-based mode to using the Internet as the primary information dissemination channel (Lymer et al., 1999; Bagshaw, 2000). The growth of
The authors would like to acknowledge the helpful comments of two anonymous reviewers on earlier drafts of the paper.
Blackwell Publishing Ltd. 2003, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.

Internet Financial Reporting in NZ 27 IFR in combination with the Internets multimedia capability and capacity for interactive communication may challenge the nature of financial reporting, its boundaries, and framework. Currently, financial statements on the Internet are unregulated. The global accessibility of financial reports on the Internet and the absence of a global regulator have possible implications for groups with interests in financial reporting, such as financial information preparers, users, auditors and regulators. Bagshaw (2000) argues that the global accessibility of corporate financial reports and the absence of a global regulator necessitates the cooperation of national and international organisations to ensure that corporate financial information is of the highest quality. The need for control over IFR largely depends on the degree to which efficient solutions are currently being found in the market for financial information of this nature. Companies elect to develop and maintain corporate websites and choose to provide financial information on such websites. Substantial accounting literature has emerged in the last 30 years that explains and predicts corporate financial disclosure behaviour. This literature focuses primarily on voluntary reporting through the traditional medium of print-based annual reports. The recent development of the Internet as a medium for the dissemination of corporate financial information creates a corporate reporting environment that may be different from the traditional print-based one. This paper examines the determinants of IFR practices of New Zealand companies. The examination of such determinants extends the theories and models that have been developed in voluntary reporting through traditional media to the new corporate reporting environment created by the Internet. Further, the paper extends prior IFR studies (such as Ashbaugh et al., 1999) by developing a wider definition of IFR and more comprehensive model of the determinants of such practices. In this study, a company is classified as practising IFR when it provides on the web a comprehensive set of financial statements and/or financial highlights extracted from financial statements (including partial and/or summarized financial statements).2 The results of our analysis indicate that, to varying degrees, size, liquidity, industry sector and spread of shareholding are the primary determinants of IFR practices among New Zealand companies. However, other firm characteristics associated with voluntary reporting, such as leverage, profitability and internationalization are not associated with IFR. The remainder of this paper is organized as follows. The next section provides a review of the literature on determinants of corporate disclosure and literature that describes the IFR environment. Section 3 develops
Blackwell Publishing Ltd. 2003.

28

P. Oyelere, F. Laswad and R. Fisher

and states the research hypotheses. This is followed by a description of the research design, including sample and data collection. Data analysis and results are then presented and discussed. Summary and conclusions, including possible limitations and areas for future research are presented in the final section. 2. Literature Review IFR may be viewed as a component of company voluntary disclosure practices (Ashbaugh et al., 1999). This section overviews the considerable literature that has emerged in the last 30 years, which examines voluntary corporate financial reporting. The study reported in this paper draws on this stream of research to extend the theories and models implicit in this literature to the new corporate reporting environment created by the Internet. This section also provides a review of the emerging literature that examines practices and issues relating to the recent development of the Internet as a medium for dissemination of corporate financial information. The review highlights specific benefits and costs which distinguish IFR from other voluntary disclosure practices. 2.1 Corporate Financial Reporting The examination of the determinants of disclosure in print-based corporate annual reports represents one of the most systematic and sustained research efforts in the financial reporting literature. Cerfs (1961) inaugural empirical study of factors influencing the adequacy of US corporate annual report disclosure laid the foundation for a succession of studies conducted in numerous countries.3 Variables hypothesized to influence disclosure levels in these studies include a variety of firm specific characteristics, such as size, profitability, listing status, and leverage. The examination of the determinants of voluntary disclosure is motivated by various research objectives, including the possibility of inadequate disclosure and the need for regulating such disclosure. Inadequate disclosure may affect users economic decisions and efficiency of capital markets. Alternatively, systematic differences in disclosure found among firms within and across industries are used as a basis for the argument that efficient solutions are being found in the market for financial information (Malone et al., 1993; Wallace and Naser, 1995). Early evidence of market efficiency includes Benstons (1969) finding that voluntary disclosure was common in the US before disclosure regulation imposed by the Securities Exchange Act of 1934.
Blackwell Publishing Ltd. 2003.

Internet Financial Reporting in NZ 29 2.1.1 Determinants of financial report disclosure. A wide variety of potential determinants of disclosure have been examined in the literature. A summary of major determinants of disclosure studies is presented in Table 1. The Table shows that the most frequently identified determinants are: corporate size, size of firms auditors (e.g., Big 8/6/5 vs. non-Big 8/6/5), listing status, profitability, leverage, and industry. A brief review of these variables is provided below. As noted by Ahmed and Courtis (1999), a wide range of theoretical arguments have been employed, including agency costs, political costs, signalling and information asymmetry, capital needs, litigation costs, and audit firm reputation. Firm size is a proxy for a number of corporate characteristics. Singhvi and Desai (1971) and Buzby (1975) describe three reasons for an association between disclosure and size. First, larger firms generally have a more diverse product range and more complex distribution networks than smaller firms. As a result, larger and more complex management information systems and databases are required for management control purposes. Consequently, disclosure costs may be generally lower for larger firms. Second, larger firms make more extensive use of capital markets for external financing relative to smaller firms. Such firms can increase the marketability of their securities in capital markets, and obtain capital more easily and cheaply through more extensive disclosure. Last, smaller firms may be more likely than larger firms to consider that full disclosure of information could endanger their competitive position. Using agency theory, Hossain et al. (1995) explain the positive association between size and disclosure on the basis that the potential benefits of disclosure increase with agency costs. Consistent with Jensen and Meckling (1976), agency costs rise with increases in the proportion of outside equity, which tends to be higher for large firms. Wallace and Naser (1995) argue that larger firms naturally attract a large following of suppliers, customers, and analysts, which consequently increase the demand for information about their activities. Political costs are used to explain a positive association between firm size and disclosure (Cooke, 1989a; Wallace and Naser, 1995; Wallace et al., 1994). Cooke (1989a) argues that larger companies are vulnerable to political costs, such as regulation, nationalization, expropriation, or the breakup of the entity or industry (Jensen and Meckling, 1976). To counter the threat of governmental interference, companies may employ a number of devices to increase disclosure and minimise reported earnings (Watts and Zimmerman, 1979; Cooke, 1991). Considerable empirical evidence supports the association between size and disclosure,4 although
Blackwell Publishing Ltd. 2003.

Table 1. Summary of Determinants of Financial Reporting Disclosure Studies Hypothesized Independent Variables* No. of Firms
50 63

Author(s)
Davies & Kelly (1979) Ahmed & Nicholls (1994)

Country
Australia Bangladesh

Dependent Variable (disclosure index)


Aggregate Mandatory

Type of Analysis
Univariate Mulivariate

Significant Influence (p 0.1)


Size (REP) Auditor size Foreign parent Qualif. of principal acctg. officer Auditor size Foreign parent Auditor size Leverage (BVD/TA) Listing status (UvL) No. of employees Size (TA) Auditor size Listing status (UvL) No. of employees Profitability (RR) Leverage (BVD/SHF) Size (SHF) Size (TA, S) Diversification

Not Significant
Leverage (BVD) Size (TA, S) Size (TA, S) Leverage (BVD) Industry Profitability (RR) Risk (INTG) Industry Leverage (BVD/TA) Risk (INTG) Size (TA) Profitability (RR) Size (TA) Auditor size Industry Auditor size Leverage (BVLTD/SHF)

Ahmed (1996) Patton & Zelenka (1997)

Bangladesh Czech Repub.

118 50

Aggregate Mandatory

Multivariate Univariate

Multivariate

Lau (1992) Tai et al. (1990) Wallace & Naser (1995)

Hong Kong Hong Kong Hong Kong

26 76 80

Voluntary Mandatory Aggregate

Multivariate Univariate Multivariate

Table 1. Continued Hypothesized Independent Variables* No. of Firms Dependent Variable (disclosure index) Type of Analysis Significant Influence (p 0.1) Not Significant
Liquidity Location of reg. office Ownership structure (PUB) Profitability (RR, EM) Size (MVE) Auditor size Profitability (EM)

Author(s)

Country

Marston & Robson (1997) Singhvi (1968)

India India

58 45

Aggregate Aggregate

Univariate Univariate

Cooke (1991) Cooke (1992) Cooke (1993) Hossain et al. (1994)

Japan Japan Japan Malaysia

48 35 48 67

Voluntary Aggregate Aggregate Voluntary

Multivariate Multivariate Univariate Univariate

Size (S) Ownership Structure (SH) Profitability (RR) Size (TA) Type of Management Industry Listing status (UvLvML) Size (TA, S, SH) Industry Listing status (LvML) Size (FACT) Listing status (LvML, UvML) Auditor size Leverage (BVLTD/SHF) Listing status (LvML)

Listing status (UvL) Assets in place

Table 1. Continued Hypothesized Independent Variables* No. of Firms Dependent Variable (disclosure index) Type of Analysis Significant Influence (p 0.1) Not Significant

Author(s)

Country

Multivariate

Chow & Wong-Boren (1987) Fekrat et al. (1996) Courtis (1979)

Mexico Multinational New Zealand

52 168 126

Voluntary Aggregate Aggregate

Multivariate Univariate Univariate

Hossain et al. (1995)

New Zealand

55

Voluntary

Multivariate

Ownership structure (TOP10) Size (MVE) Listing status (LvML) Assets in place Ownership structure (TOP10) Auditor size Size (MVE) Leverage (BVLTD/SHF) Size (MVE + BVD) Assets in place Leverage (BVD/Size) Country Industry Capital market access Age Industry Auditor size Leverage (DISS, EE) Profitability (DR, DP) Ownership Structure (SH) Report timeliness Profitability (RR, EM, ANI) Report resource alloc. (PC, PT, PG) Size (TA, S, SHF, EMP, DIR, SUB) Leverage (BVLTD/SHF) Assets in place Listing status (LvML) Auditor size Size (TA)

Table 1. Continued Hypothesized Independent Variables* No. of Firms


103 138

Author(s)
McNally et al. (1982) Inchausti (1997)

Country
New Zealand Spain

Dependent Variable (disclosure index)


Voluntary Aggregate

Type of Analysis
Univariate Multivariate

Significant Influence (p 0.1)


Industry Size (TA) Auditor size Listing status Size (TA) Liquidity Listing status (LvU) Size (TA, S) Industry Listing status (UvLvML) Size (TA, S, SH) Listing status (UvLvML) Size (TA, S, SH) Assets in place Auditor size Industry Internationality Profitability (RR) Size (S)

Not Significant
Auditor size Growth (TA) Profitability (RR) Dividend pay-out ratio Profitability (EM) Leverage (BVD/SHF) Size (S) Auditor size Industry Leverage (BVD/SHF) Profitability (RR, EM)

Wallace et al. (1994)

Spain

50

Mandatory

Multivariate

Cooke (1989a) Cooke (1989b) Raffournier (1995)

Sweden Sweden Switzerland

90 90 161

Aggregate Voluntary Voluntary

Multivariate Multivariate Univariate

Leverage (BVD/TA) Ownership structure (USH) Size (TA)

Table 1. Continued Hypothesized Independent Variables* No. of Firms Dependent Variable (disclosure index) Type of Analysis Significant Influence (p 0.1)
Auditor size Internationality Profitability (RR) Size (S) Firth (1979) Buzby (1975) Malone et al. (1993) UK USA USA 180 88 125 Voluntary Aggregate Aggregate Univariate Univariate Multivariate Listing status (UvL) Size (S, CE) Size (TA) Leverage (BVD/SHF) Listing status (UvL) Ownership Structure (SH)

Author(s)

Country

Not Significant
Assets in Place Industry Leverage (BVD/TA) Ownership structure (USH) Size (TA) Auditor size Listing status (UvL) Auditor size Diversification Foreign operations Profitability (RR, EM) Proptn. of outside directors Size (TA)

Singhvi & Desai (1971)

USA

155

Aggregate

Univariate

Auditor size Listing status (UvL) Ownership Structure (SH) Profitability (RR, EM) Size (TA)

Table 1. Continued Hypothesized Independent Variables* No. of Firms Dependent Variable (disclosure index) Type of Analysis
Multivariate

Author(s)

Country

Significant Influence (p 0.1)


Listing status (UvL) Profitability (EM) Age Ownership structure (1-PUB, LvML) Profitability (RR) Size (TA)

Not Significant
Auditor size Ownership Structure (SH) Size (TA) Auditor size Liquidity

Owusu-Ansah (1998)

Zimbabwe

49

Mandatory

Multivariate

* ANI = Absolute net income; BVD = Book value of debt; BVLTD = Book value of long term debt; CE = Capital employed; DIR = Number of directors; DISS = Public issues of long term debt; DP = Dividend pay-out ratio; DR = Dividend rate; EE = Percent external equities; EM = Earnings margin; EMP = Number of employees; FACT = Composite variable comprising eight variables; INTG = Proportion of intangible assets to total assets; L = Listed; ML = Multi-listed; PC = Preparation cost; PG = Pages; PUB = Proportion of shares owned by the public; PT = Preparation time; MVE = Market value of equity; S = Sales; SH = Number of shareholders; SHF = Shareholders funds; SUB = Number of subsidiaries; RR = Rate of Return; REP = Report recipients; TA = Total assets; TOP10 = Proportion of shares owned by top 10 shareholders; U = Unlisted; USH = Proportion of shares owned by unknown shareholders.

36

P. Oyelere, F. Laswad and R. Fisher

there are a number of notable exceptions, e.g., Lau (1992); Malone et al. (1993); Ahmed and Nicholls (1994); and Ahmed (1996). The association between corporate profitability and disclosure has been examined by a number of studies. It is argued that disclosure is used by the managers of profitable firms to signal the firms profitability to investors, and to help support managements continuation and compensation (Singhvi and Desai, 1971; Malone et al., 1993). However, Wallace et al. (1994) and Lang and Lundholm (1993, pp. 248, 251) caution that disclosure may be related to variability of a firms performance, where performance serves as a proxy for information asymmetries between investors and managers. In general, the empirical findings are conflicting. Studies have found a positive relationship (Singhvi, 1968; Singhvi and Desai, 1971; Courtis, 1979; Owusu-Ansah, 1998), no relationship (McNally et al., 1982; Lau, 1992), and a negative relationship (Wallace and Naser, 1995). Industry has been posited to be associated with disclosure. Wallace and Naser (1995) argue that differential levels of disclosure of similar items in financial reports published by firms in different industries may arise from the adoption of industry-related disclosures. Differences in disclosure levels between industries could also be attributed to the high level of voluntary disclosure by a dominant firm within an industry, which leads to a bandwagon effect (Cooke, 1989a). Empirical studies examining the association between industry and disclosure have yielded mixed results. Industry was found to be a determinant of disclosure levels by Courtis (1979), McNally et al. (1982), Cooke (1989a, 1991, 1992), and Fekrat et al. (1996); whilst no relationship was found in Tai et al. (1990), Wallace et al. (1994), and Patton and Zelenka (1997). Agency theory has largely been used to explain the relationship between firm leverage and corporate disclosure. It is argued that as leverage increases, there are wealth transfers from fixed claimants to residual claimants. As debenture holders are able to price-protect themselves, managers and shareholders have an incentive to voluntarily increase the level of monitoring, such as by increasing the disclosure of additional information about the firm activities (Myers, 1977; Schipper, 1981). Empirical evidence regarding the association between leverage and voluntary disclosure is inconclusive. Courtis (1979), Lau (1992), Malone et al. (1993), Hossain et al. (1994, 1995), Patton and Zelenka (1997) find a positive relationship between leverage and corporate disclosure. Chow and Wong-Boren (1987), Ahmed and Nicholls (1994), Wallace et al. (1994), Raffournier (1995), Wallace and Naser (1995), Ahmed (1996), and Inchausti (1997) find no association between the two variables.
Blackwell Publishing Ltd. 2003.

Internet Financial Reporting in NZ 37 Stock exchange listing status (e.g., listed versus unlisted, or listed versus multiple listings) is associated with disclosure (Singhvi and Desai, 1971; Firth, 1979; Cooke, 1989a,b, 1991, 1992, 1993; Malone et al., 1993; Hossain et al., 1994, 1995; Wallace et al., 1994; Inchausti, 1997; Patton and Zelenka, 1997). Cooke (1989a) argues that agency costs increase as shareholders become more remote from management. As unlisted companies tend to have a smaller number of shareholders, agency costs are expected to be lower than those for listed companies. Conversely, due to the greater separation between owners and managers, listed companies are likely to incur higher agency costs, such as monitoring costs. These costs can be reduced through the voluntary disclosure of additional corporate information (Schipper, 1981). Hossain et al. (1995) suggest that both stock exchange listing status and voluntary corporate disclosure are complementary forms of monitoring. Consequently, one would expect to find a positive relationship between the two variables. A recent meta-analysis by Ahmed and Courtis (1999) attempted to integrate prior voluntary disclosure studies and identify some of the underlying factors contributing to the variations in the results of these studies. Using 29 voluntary disclosure studies, they found a significant association between disclosure levels and firm size, listing status, and leverage. Further, they argued that prior results were moderated by differences in disclosure index construction, differences in definition of the explanatory variables, and differences in research setting. 2.2 Internet Financial Reporting Literature The literature in relation to financial reporting on the Internet is growing. A number of studies discuss the benefits of IFR, speculate on its future, and identify issues and concerns in relation to the use of such medium. Some studies report on surveys of IFR practices in single countries while others undertake cross-country comparisons. A few studies examine the corporate characteristics associated with the choice of Internet corporate financial reporting. 2.2.1 Benefits, issues, future, and professional pronouncements relating to Internet financial reporting. A number of studies discuss the benefits of providing financial information on the Internet (e.g., McCafferty, 1995; Louwers et al., 1996; Green and Spaul, 1997; Trites and Sheehy, 1997; Trites, 1999). Cost savings from the reduction of production and distribution associated with print-based annual reports and incidental requests
Blackwell Publishing Ltd. 2003.

38

P. Oyelere, F. Laswad and R. Fisher

from non-shareholder financial statement users is one of the main benefits from providing financial reports on the Internet. Internet reporting improves users access to information by providing information that meet their specific needs, allowing non-sequential access to information through the use of hyperlinks, interactive and search facilities, and allowing the opportunity for providing more information than available in annual reports. This improved accessibility of information results in more equitable information dissemination among stakeholders. The advantages of IFR give rise to a number of issues, which include blurring the line between audited and unaudited information, equity and efficiency of access, introduction of errors, security and integrity of the information, and other professional issues. Internet reporting blurs the distinction between current financial information used by management and the historical (and audited) information made available to the public (Green and Spaul, 1997; Hodge, 2001). This reporting may supersede the historically audited information currently made available to shareholders and the companys broader constituencies by providing financial information used by management (Laine, 1997). This may place greater demands on auditors to provide opinion on this data (Trites and Sheehy, 1997). Debreceny and Gray (1999) identify a number of audit and auditor implications regarding the dissemination of audited financial statements on the Internet. These implications include the association of the audit report with unaudited information and the responsibilities of auditors to monitor clients websites. Debreceny and Gray argue that if the auditing profession does not address such issues, the courts and government regulatory bodies will develop standards to address them. Access to information on the Internet is currently limited to those with costly equipment and services, and computer skills. To ensure equity and efficiency, there is a need to make sure that the information provided on the Internet has been disclosed previously or simultaneously by using other forms of communication (McCafferty, 1995). Companies that choose to extract or re-key data from annual reports and make it accessible through the Internet may introduce errors, which affect the integrity of the information. Placing a disclaimer concerning the completeness of the information would alert the users of the information (Hussey and Sowinska, 1999). The security and integrity of corporate information on the Internet may be compromised intentionally or unintentionally. It is the responsibility of companies to ensure the security and integrity of financial information they
Blackwell Publishing Ltd. 2003.

Internet Financial Reporting in NZ 39 place on the Internet. To overcome such concern, Hussey and Sowinska (1999) suggest that regulators should address the issue of a compulsory filing system for financial reporting on a secure and government-controlled server. There are a number of other professional and technical issues. Providing financial information on the Internet may not enhance the understanding of corporate financial information. Generally Accepted Accounting Practice (GAAP) is developed in a traditional reporting environment and may not be suitable for electronic financial information environment. Users may not regard Internet reporting as an acceptable substitute for print-based annual reports. Companies use their websites for many purposes and therefore financial information may become difficult to locate. The use of the Internet for the dissemination of corporate information is a recent phenomenon and some studies speculate on its future. Louwers et al. (1996) note that the future of online financial reporting may involve extending disclosure beyond the reproduction of a print-based annual report, improving timeliness, expanding scope, and permitting a high degree of interactive retrieval of information. Timeliness is improved by providing financial data to the public as soon as possible by disclosing annual report data on the Internet before it is available in hard copy. The future of IFR may include the use of multimedia, such as sound, animation and video to potentially increase the understanding of information. Lymer (1999) suggests that the cost savings and the wide availability of data made possible by using the Internet are likely to encourage more demand for its use to fulfil statutory, as well as extra-statutory, reporting requirements. In December 1999, the first professional pronouncement relating to IFR was released by the Auditing and Assurance Standards Board (AuASB) of the Australian Accounting Research Foundation (AARF) in the form of an Auditing Guidance Statement (AGS 1050) Audit Issues Relating to the Electronic Presentation of Financial Reports. AGS 1050 clarifies that providing assurance about the effectiveness of the controls and security over information on the entitys web site is beyond the scope of the audit of a financial report. The Guidance draws the auditors attention to the practices surrounding the electronic presentation of information on a web site as certain characteristics in the presentation of electronic documents may increase the risk of inappropriate association of unaudited information with the audit report. The AGS identifies specific matters that may be addressed by the auditor with management, to raise awareness of the risks arising and to assess any impact on the audit report to be presented on the entitys web site. Similar guidance in Bulletin 2001/1: The Electronic Publication of Auditors Reports has recently been issued by the UK
Blackwell Publishing Ltd. 2003.

40

P. Oyelere, F. Laswad and R. Fisher

Auditing Practice Board. However, there are no specific audit requirements/guidance in New Zealand with respect to IFR. 2.2.2 Internet reporting practices. A number of professional studies in the US, Canada, UK, Ireland and Finland examine corporate financial reporting on the Internet (see, for example, Petravick and Gillett, 1996; Flynn and Galthorpe, 1997; Koreto, 1997; Lymer, 1997; Lymer and Tallberg, 1997; Wildstrom, 1997; Brennan and Hourigan, 1998; Marston and Leow, 1998). These studies report that increasing numbers of companies are using the Internet for communicating financial information. However, these studies report little improvement in the provision of such information where online corporate reports consist mainly of displaying hard copies of annual reports in an electronic format. IFR practices in many countries have been surveyed by a number of academic studies (UK [Craven and Marston, 1999], Austria and Germany [Pirchegger and Wagenhofer, 1999], International Comparison [Lymer et al., 1999], US and Canada [Trites, 1999], US, UK and Germany [Deller et al., 1999], Sweden [Hedlin, 1999], Spain [Gowthorpe and Amat, 1999], New Zealand [Fisher et al., 2000]). These studies indicate the growing use of the Internet for corporate dissemination including providing annual reports on the Internet and that the extent and sophistication of IFR practices varies across countries. Williams and Ho (1999) compare corporate social disclosure on companies websites and annual reports in Australia, Singapore, Malaysia and Hong Kong. They find that Australian and Singaporean companies provide more corporate social disclosures on websites than in annual reports while companies in Malaysia and Hong Kong are reporting similar information in the two media. 2.2.3 Characteristics associated with Internet financial reporting. A number of studies have examined whether firm characteristics are associated with IFR. Craven and Marston (1999) examine the extent of financial information disclosure on the Internet by the largest companies in the UK in 1998 and whether such practice is associated with firm size and industry type. They find that the extent of financial disclosure on the Internet is positively associated with firm size but not associated with industry type. Ashbaugh et al. (1999) examine the IFR practices of US companies. They find that firms operating websites are larger than firms without websites. Using univariate analysis, they find profitability, indicators of excellence in reporting practices, and to some extent the percentage of equity
Blackwell Publishing Ltd. 2003.

Internet Financial Reporting in NZ 41 shares held by individual investors are associated with IFR. However, a multivariate logit regression indicates that only firm size is associated with IFR. Ashbaugh et al. suggest that future research should develop a more complete model of the determinants of IFR. Pirchegger and Wagenhofer (1999) examine IFR practices by Austrian and German companies. They find that for Austrian companies IFR is associated with firm size, measured by sales, and dispersion of its equity ownership. However, such results did not extend to German companies. There has not been an in-depth study of the determinants of IFR. As discussed earlier, many theories or models in the accounting literature such as agency/contracting, signalling and costs/benefits attempt to explain disclosure choice by identifying the motivations for voluntary reporting practices. The voluntary and growing use of the Internet as a medium for the dissemination of financial information provides an opportunity for an in-depth examination of the incentives that motivate such unregulated dissemination of corporate information. An understanding of voluntary reporting behaviour would be gained by assessing whether the determinants associated with traditional dissemination of financial information through print-based annual reports would explain IFR practices. Several previous studies examining Internet reporting practices, such as Ashbaugh et al. (1999) and Pirchegger and Wagenhofer (1999), have relied on search engines alone in identifying study samples or populations. This sample selection method may under-identify entities providing Internet financial information and may introduce sample selection bias. This study uses a more comprehensive approach in identifying entities engaging in IFR. 3. Hypotheses Development and Statement IFR is unregulated, and as such, firm disclosure is likely to reflect the trade-off between the relevant perceived costs and benefits of supplementing traditional financial reporting with IFR. Costs could include preparation and dissemination costs, litigation costs, or loss of competitive position; while benefits may include factors such as reductions in agency costs, and avoidance of political or legal costs. The literature reviewed in the preceding section provides the basis for the research hypotheses relating to IFR. As discussed in the previous section, agency costs tend to increase with firm size (Hossain et al., 1995). As voluntary disclosure can reduce monitoring costs, a significant agency cost, one would expect to find greater disclosure among large firms relative to small firms. Further, as the cost of information production and dissemination on the Internet is likely to
Blackwell Publishing Ltd. 2003.

42

P. Oyelere, F. Laswad and R. Fisher

be largely unrelated to firm size (Pirchegger and Wagenhofer, 1999), the benefits of disclosure over the Internet are likely to be increasing with size. As a consequence, the first hypothesis (stated in alternative form) is: H1: There is a positive association between company size and the voluntary use of IFR. Lang and Lundholm (1993, pp. 248249) suggest that there is a common perception that management is more forthcoming with information when the firm is performing well than when it is performing poorly. One explanation, based on signalling theory, is that in such situations management is keen to raise shareholder confidence and support management compensation contracts (Singhvi and Desai, 1971; Malone et al., 1993). Poorer performing firms may avoid using voluntary disclosure techniques, such as IFR, preferring instead to restrict access to accounting information to more determined users (Craven and Marston, 1999, p. 323). However, Lang and Lundholm (1993, p. 249) suggest that sometimes, certain types of negative information (particularly earnings information) may be disclosed voluntarily to reduce the likelihood of legal liability, e.g., due to unexpectedly large losses. We hypothesize, in alternative form, that: H2: There is an association between company profitability and the voluntary use of IFR. The concern that regulators, investors, and other users have regarding companies going concern status, may motivate highly liquid companies to make their high levels of liquidity known through voluntary disclosures on the Internet (Wallace and Naser, 1995; Owusu-Ansah, 1998). The use of Internet for providing financial information may be an expression of managements confidence in a companys solvency and future prospects. This leads to the following hypothesis: H3: There is a positive association between company liquidity and the voluntary use of IFR. The degree of internationalization of a firm is likely to be associated with voluntary disclosure because as a company expands its foreign operations, its need to raise capital internationally increases (Cooke, 1991, 1992). Such a company will have an incentive to lower capital costs through the voluntary release of information (Choi, 1973; Owusu-Ansah, 1998). IFR provides potential international investors with immediate access to
Blackwell Publishing Ltd. 2003.

Internet Financial Reporting in NZ 43 both financial and non-financial information concerning the companys affairs at relatively little cost to both the investors and the reporting entity (Ashbaugh et al., 1999; Craven and Marston, 1999; Williams and Ho, 1999). This discussion leads to the following hypothesis: H4: There is a positive association between internationalization and the voluntary use of IFR. Agency theory explains and predicts that managers of companies whose ownership is diffuse have an incentive to disclose more information to assist shareholders in monitoring their behaviour (Raffournier, 1995). IFR allows companies to provide users with more comprehensive, in depth, and timely information than that included in traditional financial statements, and in a manner which may reduce the users information costs (Ashbaugh et al., 1999). This is expressed in the following hypothesis: H5: There is a positive association between diffuseness of ownership and the voluntary use of IFR. Political cost theory suggests that industry membership may affect the political vulnerability of firms (Inchausti, 1997; Craven and Marston, 1999). Firms in industries that are more politically vulnerable may use voluntary disclosure to minimize political costs, such as regulation, breakup of the entity/industry, etc. Signaling theory also suggests industry differences in disclosure. If a company within an industry fails to follow the disclosure practices, including Internet disclosures, of others in the same industry, then it may be interpreted that the company is hiding bad news (Craven and Marston, 1999). Evidence supporting an association between industry and the extent of financial information provided on corporate websites was recently provided by Ettredge et al. (2001). Their results reinforced comments obtained by the researchers from a sample Investor Relations directors that they monitored competitors websites to benchmark their own site content and to avoid their company being perceived as backwards relative to industry peers. This discussion leads to the following hypothesis: H6: There is an association between industry type and the voluntary use of IFR. Agency theory explains and predicts that the potential for wealth transfers from fixed claimants to residual claimants increases with leverage
Blackwell Publishing Ltd. 2003.

44

P. Oyelere, F. Laswad and R. Fisher

(Jensen and Meckling, 1976; Myers, 1977; Watts, 1977). To mitigate the effects of price-protection by fixed claimants, highly leveraged firms have an incentive to voluntarily increase the level of corporate disclosure to such stakeholders through traditional financial statements, and other media, such as IFR. This is expressed in the following hypothesis: H7: There is a positive association between leverage and the voluntary use of IFR. As all sample firms were listed on the New Zealand Stock Exchange, listing status was not examined as a potential determinant of the voluntary use of IFR in this paper. 4. Research Design This section describes the research design of the study including sample description and data collection. 4.1 Sample All 229 companies listed on the New Zealand Stock Exchange (NZSE) as at the end of 1998 were included in this study. Three approaches were used to determine the Internet presence or otherwise of the companies. First, two websitesThe Global Register <http://www.globalregister.co.nz> and Knowledge Basket <http://www.knowledge-basket.co.nz/datex/free/ webs.htm>5were consulted to establish presence and obtain the web addresses of relevant companies. Second, searches, using the <www. metacrawler.com> search engine were carried out on the companies not available from the above two websites. Finally, the remaining companies were contacted by telephone to find out whether or not they have established corporate websites and if so obtain web addresses. The use of multiple sources was considered necessary given the speed of developments regarding website establishment among companies. This approach is an improvement on the typical method of identifying websites through search engines only. Table 2 presents the distribution of website- and non-website-using New Zealand companies by industry and foreign listing. Primary, service, and investment sectors are the largest industries on the New Zealand Stock Exchange.6 About one third of companies listed on the New Zealand Stock Exchange are also listed on foreign stock exchanges.
Blackwell Publishing Ltd. 2003.

Internet Financial Reporting in NZ 45


Table 2. Distribution of Website- and Non-Website-Using Companies by Industry and Foreign Listing Panel A: By industrial sector* Total Count
Primary (G01) Energy (G02) Goods (G03) Property (G04) Services (G05) Investment (G06) Total 58 14 28 20 58 51 229

No Website Count
18 3 8 12 24 41 106

Website Count
40 11 20 8 34 10 123

%
25.3 6.1 12.2 8.7 25.3 22.3 100.0

%
17.0 2.8 7.5 11.3 22.6 38.7 100.0

% (of industry total)


32.5 (70) 8.9 (79) 16.3 (71) 6.5 (40) 27.6 (59) 8.1 (20) 100.0 (n/a)

Panel B: By foreign listing status Count


Listed in New Zealand only Listed in New Zealand and foreign exchanges Total 155 74 229

%
67.7 32.3 100.0

Count
76 30 106

%
71.7 28.3 100.0

Count
79 44 123

% (of listed total)


64.2 (51) 35.8 (60) 100.0

* Based on New Zealand Stock Exchange market sector groupings.

One hundred and twenty-three companies (53.7%) have websites with the highest proportions of such companies with websites being in either the Primary industry (32.5%) or the Services industry (27.6%). On intraindustrial basis, the Energy sector has the highest proportion of corporate website with 79% of energy companies having websites. This compares to about 71 and 70% respectively for the Goods and Primary sectors. About one-third (32.3%) of the companies are foreign-listed. Of these, about 60% (44) have websites, as compared to 51% (79) of companies not listed overseas, suggesting foreign listing as a potential factor affecting companies decision to create websites. The 123 companies with websites use them to provide a broad range of information. Table 3 presents classes of information provided at these corporate websites. Four major classes of information were identified: products and/or services information (about 99% of websites); corporate
Blackwell Publishing Ltd. 2003.

46

P. Oyelere, F. Laswad and R. Fisher

Table 3. Type of Information Published at Listed Companies Websites (n = 123) Main types of information published
Product or service information Company history or background News and announcements Financial information Other types of information published Reference information (articles/links to other useful sites) E-Commerce (uses some form of e-commerce, e.g., online booking, shopping, tracking, etc) Social (environmental and/or community information) Employment (information on employment opportunities)

Companies
122 116 83 90 40 29 27 15

%
99.2 94.3 67.5 73.2 32.5 23.6 22.0 12.2

history, background and profiles (94%); news and announcements (68%); and financial information7 (73%). In addition to these major categories, companies also provide other types of information such as reference materials including articles and links to other useful/related websites (33%); e-commerce facilities, including online booking, shopping and/or tracking (24%); social-oriented, environmental and/or community-related information (22%); and employment and job opportunities (12%). About three-quarters (73.2%) of companies with websites in this study provide financial information on their websites. For the purpose of this research, the 229 NZSE-listed companies were classified into three types: (1) companies without a website (n = 106); (2) companies with a website, and not engaging in IFR (n = 33); and (3) companies with a website and engaging in IFR (n = 90). In this study, the 139 companies in categories (1) and (2) were grouped together as non-Internet financial reporting companies (N-IFRC), while the 90 companies that engage in IFR were classed as Internet financial reporting companies (IFRC). Table 4 presents the main features, frequency, format and types of financial information provided by IFRC. Companies were classified into three categories on the basis of whether they provided comprehensive annual financial statements only (38%), financial highlights only (18%), or both financial statements and highlights (44%). Although not reported in Table 4, 94% of comprehensive financial statements incorporated an audit report, whilst financial highlights were generally not accompanied by an audit report unless they included a set of summarized financial statements. Some companies provide archives for previous years financial
Blackwell Publishing Ltd. 2003.

Internet Financial Reporting in NZ 47


Table 4. IFR Practices of New Zealand Companies
Panel A: Type of financial information, number of years, and electronic format (n = 90)

Total Type of Information No. of Companies %

No. of Years

Format

4 or 1 2 3 More PDF HTML Both Others

Comprehensive financial statements only Financial highlights only Both comprehensive financial statements and financial highlights Total

34 16 40 90

37.8 17 13 3 17.8 6 7 2

1 1 9 11

17 2 18 37

9 14 8 31

6 12 18

2 2 4

44.4 13 8 10 100 36 28 15

Panel B: Electronic features used in providing financial information (n = 90)

Electronic Features
Graphics, video or audio Hyperlinks Appropriate screen layout for data view Options available for viewing data in frame/no-frame

No. of Companies
73 57 45 22

%
81.1 63.3 50.0 24.4

information. Two main formatsHypertext Mark-up Language (HTML) and Portable Document File (PDF)are predominantly used for the provision of financial information. Thirty-seven of the 90 companies provide financial information in PDF format only compared to the 31 which use the HTML format only. Eighteen companies employ both formats, while the remaining four companies use other formats such as MS Words and MS Excel spreadsheets. Panel B of Table 4 presents the extent to which companies utilise certain electronic features to enhance the display, readability, and understandability of the financial information they provide on their websites. About 81% of such companies use graphic, video and/or audio features to enhance the provision of financial information on their sites. Fifty-seven of the companies use hyperlinks to ensure easier navigation and crossreferencing of their financial information, while 22 of them provide users with the option to view their financial information with or without frames. However, very few New Zealand companies took advantage of the online
Blackwell Publishing Ltd. 2003.

48

P. Oyelere, F. Laswad and R. Fisher

nature of the web to provide real-time and other market-related information such as share prices/stock tickers, analyst factbooks, back orders, labour contracts, monthly/weekly sales, stock plans and performance reports. Five companies provide links to other websites which have real-time share prices/stock tickers for many companies. This indicates that New Zealand practice is lagging behind US practices in providing a wider information set, as reported by Ashbaugh et al. (1999). 4.2 Data Collection Data for relevant variables in this study were collected from corporate websites for companies with Internet financial reports,8 and the Datex database9 for the remaining companies. Where these two sources failed to yield the required data, hard copies of the companys annual reports and accounts were consulted. Finally, various publications of the New Zealand Stock Exchange and several editions of The New Zealand Business Whos Who (199698) directory were consulted to obtain additional descriptive details such as industry group sectors, foreign listings, and location of control. The primary data variables collected and their respective definitions are presented in Table 5. 5. Data Analysis and Results Univariate and multivariate analytical approaches were employed in the study to identify the determinants of IFR. First, exploratory data analysis was carried out to determine the tendencies of the collected data. The 229 companies were divided into two categories: companies providing financial reports on the Internet (IFRC) and companies not providing financial reports on the Internet (N-IFRC). The latter group included both companies with websites but no financial information and companies without websites. Descriptive statistics pertaining to the independent variables for IFRC and N-IFRC are presented in Table 6. Comparison between IFRC and N-IFRC reveal that companies that engage in IFR are generally larger and more profitable than non-IFR ones. Their average market value of $10,819 million is far greater than that of N-IFRC (only $169 million). A similar disparity is observed for the other measure of size (Total assets) used in this study. IFRC are associated with higher levels of profitability across both unadjusted (not reported here) and size-adjusted variables. On average, IFRC also appear to be more liquid than N-IFRC. A greater proportion (76%) of N-IFRCs shares are
Blackwell Publishing Ltd. 2003.

Internet Financial Reporting in NZ 49


Table 5. Research Variables Variables
Size Market capitalization Total assets Profitability Return on equity Return on total asset Liquidity Cash assets by total assets Internationalization Share spread Industrial sector

Definition*
Market value of companies as measured by their total capitalisation as at the end of 1998 Average total assets Profit after tax 100 Shareholder equity Profit after tax 100 Total assets Cash and similar items Total assets Foreign listed and/or controlled The proportion of shares owned by the top 40% of shareholders Main industrial group sector: G01 = Primary; G02 = Energy; G03 = Goods; G04 = Property; G05 = Services; and G06 = Investment Total debt Shareholder equity

Leverage Debt to equity ratio

* Averages are for the three years 1996 to 1998 for all variables other than internationalization and industrial sector.

held by their top 40% shareholders, indicating narrower spread of ownership among IFRC. Also, a greater proportion (52%) of IFRC are internationalized as against only 37% of N-IFRC. Univariate independent sample t-tests and Chi-square tests on the relevant independent variables for the two categories of companies, IFRC and N-IFRC, are presented in Table 7. The results of the tests indicate support for H1, in that differences in size are statistically significant across the two measures of size, market capitalization and total assets. Differences in both average market capitalisation and total assets are significant at the 1% level. Profitability and leverage appear not to be associated with IFR when the two groups are compared as no statistically significant differences were found. On this basis, it appears that H2 and H7 are not supported in this study. With respect to ownership spread, IFRCs shareholding base is
Blackwell Publishing Ltd. 2003.

50

P. Oyelere, F. Laswad and R. Fisher

Table 6. Descriptive Statistics Variable


Size Market capitalization ($000)

Statistics
Mean Median Std Deviation Percentile 25 Percentile 75 Mean Median Std Deviation Percentile 25 Percentile 75 Mean Median Std Deviation Percentile 25 Percentile 75 Mean Median Std Deviation Percentile 25 Percentile 75 Mean Median Std Deviation Percentile 25 Percentile 75 Count: Yes No Mean 75.96 Median Std Deviation Percentile 25 Percentile 75

N-IFRC*

IFRC*

All Companies

Total assets ($000)

$168,584.82 $10,818,606.49 $4,831,907.92 $32,860.53 $180,360.46 $69,133.80 $491,529.21 $84,682,364.32 $56,073,471.34 $10,225.02 $50,049.25 $13,446.55 $139,237.42 $783,505.63 $289,087.76 $349,088.43 $3,084,020.49 $1,584,219.04 $61,679.36 $297,887.33 $101,546.77 $1,162,857.25 $7,540,835.81 $5,302,146.81 $16,427.00 $60,080.11 $30,922.00 $198,619.67 $2,690,183.33 $535,511.58 0.02 0.04 0.22 0.03 0.12 0.02 0.02 0.19 0.01 0.08 0.06 0.01 0.15 0.01 0.09 49 90 68.82 82.34 20.89 69.71 91.43 24 6 14 13 37 45 2.01 1.61 1.83 1.24 2.31 0.18 0.08 1.17 0.01 0.12 0.01 0.04 0.13 0.01 0.06 0.20 0.03 0.60 0.01 0.12 47 43 72.81 74.55 19.63 54.69 84.15 34 8 14 7 21 6 2.47 1.43 4.48 0.91 2.02 0.09 0.06 0.81 0.01 0.12 0.01 0.03 0.17 0.01 0.07 0.13 0.02 0.43 0.01 0.09 96 133 79.06 20.60 60.69 88.69 58 14 28 20 58 51 2.22 1.57 3.32 1.12 2.10

Profitability Return on equity

Return on total asset

Liquidity Cash assets by total assets

Internationalization Share spread

Industry

Count: Primary Energy Goods Property Services Investment Mean Median Std Deviation Percentile 25 Percentile 75

Leverage Debt to equity ratio

* N-IFRC = Non-Internet financial reporting companies (n = 139); IFRC = Internet financial reporting companies (n = 90).
Blackwell Publishing Ltd. 2003.

Internet Financial Reporting in NZ 51


Table 7. Univariate Sample Test of Independent Variables for N-IFRC and IFRC Panel A: T-test of variables on interval scale Mean Difference (Standard errors of mean) t-value Significance#
Market capitalization (log) Total assets (log) Profitability: Return on equity Return on total assets Liquidity: Share spread Leverage: Debt to equity ratio Cash assets by total assets 0.8565 (0.1453) 0.7608 (0.1327) 0.1551 (0.1308) 0.0103 (0.0240) 0.1408 (0.0673) 7.1435 (3.1198) 0.4538 (0.5284) 5.895 5.732 1.186 0.427 2.093 2.290 0.859 0.000*** 0.000*** 0.239 0.670 0.020** 0.012** 0.196

Variable
Size:

Panel B: Pearsons Chi-square test of variables on categorical scale Variable


Internationalization Industry

Value
6.462 28.885

df
1 5

Asymp. Sig. (2-sided)


0.011** 0.000***

# significance is 1-tailed for all variables except for profitability which is 2-tailed. ** and *** indicate significance at the 5 and 1% levels, respectively.

more dispersed as lower percentages of shares are retained in the hands of their top 40% of shareholders. The difference between the two groups is significant at the 5% level and thus supports H5. Similarly, there is a statistically significant difference at the 5% level in the levels of liquidity between the two categories of companies. In general, the results of the univariate test appear to provide support for H3, with IFRC reporting greater levels of liquidity than N-IFRC. H4 (internationalization) and H6 (industry) were tested at the univariate level using chi-square tests. The difference in the internationalization of N-IFRC and IFRC is statistically significant at the 5% level, while differences among industry sectors are significant at the 1% level.
Blackwell Publishing Ltd. 2003.

52

P. Oyelere, F. Laswad and R. Fisher

In summary, the univariate analysis indicates that, IFRC are larger, relatively more liquid, and have a more widely dispersed shareholding base than N-IFRC. These results are consistent with the findings of Craven and Marston (1999) and Ashbaugh et al. (1999). Also, IFRC appear to have a greater degree of internationalization than their N-IFRC counterparts. It is unclear at this stage if this is logically associable with the fact that IFRC are larger, with wider dispersal of their shareholding base. This paper further investigates whether IFR practices of these companies can be predicted from a combination of these variables. A multivariate logistic regression analysis is employed, with the dependent variable classified as a binary choice between IFRC and N-IFRC. Logit analysis enables us to investigate the probability of an events occurrence in relation to a number of measurable independent variables, with the estimation allowing us to compare the relative importance of these variables. Two models, A and B, incorporating different measures of the independent variables, size and profitability, were specified in order to investigate the determinants of IFR among the listed companies. The models examined were of the following form: Yi = + 1 (Size)i + 2 (Profitability)i + 3 (Liquidity)i + 4 (Internationalization)i + 5 (Ownership Spread)i + 610 (Industry15)i + 11 (Leverage)i + I (1) Where, for the i th firm in Model A, Y Size Profitability Liquidity Internationalization Ownership spread Industry = = = = = = = = IFR practice; 0 for N-IFRC and 1 for IFRC the constant of the equation log of market capitalisation return on total assets cash assets by total assets foreign listing or foreign control (1 = yes, 0 = no) proportion of shares held by top 40% shareholders Industrial sectorIndustry1 is primary sector (G01), 1 if yes and 0 otherwise; Industry2 is energy sector (G02), 1 if yes and 0 otherwise; Industry3 is goods sector (G03), 1 if yes and 0 otherwise; Industry4 is property sector (G04), 1 if yes and 0 otherwise; Industry5 is services sector (G05), 1 if yes and 0 otherwise; Investment sector (G06) is the reference group10

Blackwell Publishing Ltd. 2003.

Internet Financial Reporting in NZ 53 Leverage = total debt to equity ratio = error term

The exploratory variables used in Model B are identical to those of Model A above except for the following: Size Profitability = log of total assets = return on equity

To assess possible multicollinearity issues, the correlations among the models continuous independent variables are measured and reported in Table 8. As one would expect, the two measures of size are highly correlated, as are the alternative measures of profitability. Although not reported here, we also found a high level of correlation between the measures of internationalization on the one hand, and ownership spread and size (total assets) on the other. It appears, from this finding, that highly internationalized companies are generally larger and more widely owned. However, a review of collinearity diagnostics11 did not indicate that multicollinearity would be a concern in the subsequent analyses. The results of the estimate of Model A for all 229 companies are reported under A1 in Table 9. Model A1, which accurately classifies more than 79% of the observations in this study is statistically significant at the 1% level. The results of its estimation indicate that IFR practices are highly dependent on size, liquidity, and ownership spread, thereby supporting H1, H3, and H5. Size is a statistically significant predictor at the 1% level, while liquidity and ownership spread are significant at the 10% and 5% level, respectively. Profitability, internationalization, industry, and leverage are not significant.
Table 8. Pearsons Correlation Matrix of Independent Variables Log of Log of Market Total Capitalization Assets
Log of total assets Return on equity Return on total assets Leverage Liquidity Share spread

Return Return on on Total Equity Assets Leverage Liquidity

0.674*** 0.274*** 0.031 0.263** 0.233*** 0.351*** 0.083 0.141* 0.477*** 0.101 0.063 0.172** 0.041 0.107 0.006 0.044 0.035 0.031

0.044 0.107

0.086

*, ** and *** indicate significance at the 10, 5 and 1% levels (2-tailed), respectively.
Blackwell Publishing Ltd. 2003.

54

P. Oyelere, F. Laswad and R. Fisher

Table 9. Multivariate Logistic Regression Results Model Research Variable# Expected Sign
Constant Size Profitability Liquidity Internationalization Ownership Spread Industry Industry1 (Primary) Industry2 (Energy) Industry3 (Goods) Industry4 (Property) Industry5 (Services) Leverage 2 Log likelihood Nagelkerke R2 Chi2 statistics Degrees of freedom Number of observations Correctly predicted: N-IFRC IFRC Overall + +/ + + +/ +/ +/ +/ +/ +/ +

A1
5.796*** (1.690) 1.510*** (0.326) 2.562 (1.986) 2.782* (1.454) 0.257 (0.498) 0.030** (0.013)

A2
6.905*** (1.852) 1.751*** (0.359) 3.307 (2.120) 3.132* (1.749) 0.427 (0.526) 0.037** (0.014)

B1

B2
6.203*** (1.735) 1.536*** (0.310) 0.863 (1.393) 4.303** (1.686) 0.150 (0.494) 0.032** (0.013) ** 0.753* (0.408) 0.564 (0.572) 0.431 (0.482) 0.649 (0.564) 0.571 (0.428) 0.059 (0.092) 157.749 0.454 68.040*** 11 227 82.2% 67.6% 75.6%

5.747*** (1.655) 1.394*** (0.284) 0.433 (0.407) 3.092** (1.368) 0.231 (0.479) 0.030** (0.012) ** 0.508 0.602 0.905** (0.407) (0.424) (0.393) 0.181 0.138 0.616 (0.559) (0.574) (0.556) 0.373 0.439 0.373 (0.475) (0.501) (0.465) 0.186 0.091 0.533 (0.617) (0.638) (0.550) 0.458 0.729 0.497 (0.427) (0.462) (0.419) 0.058 0.077 0.047 (0.113) (0.161) (0.089) 153.839 142.231 162.693 0.427 0.482 0.438 59.852*** 68.653*** 65.887*** 11 11 11 229 227 229 85.2% 81.6% 84.6% 72.1% 71.6% 68.0% 79.5% 77.3% 77.1%

*, ** and *** indicate significance at the 10, 5 and 1% levels, respectively. # Explanatory variables for the models are: Size = log of market capitalization (A1 and A2), log of total assets (B1 and B2); Profitability = return on total assets (A1 and A2), return on equity (B1 and B2); Liquidity = cash assets by total assets; Internationalization = foreign listing/control; Ownership spread = Proportion of shares held by top 40% of shareholders; Industry = industrial sector; Leverage = Total debt to equity ratio.

Cooks Distance test is used to explore potential outlying or misclassified cases, which indicates that two outlying cases were exercising disproportionate influence on the residuals resulting from the estimation of Model A1. These cases were removed and the model is re-estimated with a smaller
Blackwell Publishing Ltd. 2003.

Internet Financial Reporting in NZ 55 sample of 227 companies. The results of this estimation are presented as A2 in Table 9. Model A2, for which the two outliers were removed, is also significant at the 1% level, with about 77% rate of correctly predicted observations. Its results are broadly similar to those of Model A1. Model B1 was estimated using alternative variables for size and profitability. The results confirm the findings in the previous models that size, level of liquidity, and ownership spread are positively related to IFR practices. In addition, industry is also found to be a significant predictor of IFR at the 5% level. Of industrys constituent categories, the primary industry group sector is significant at the 5% level. The direction of its regression coefficient indicates that relative to the average of all industry group sectors, companies in the primary group sector are more likely to engage in IFR. Profitability, internationalization, and leverage are not significant. Similar to the procedure applied to Model A1 above, Cooks Distance test revealed that two of the cases in the study exerted disproportionate influence on the coefficients that resulted from Model B1s estimation. Model B2 is a re-estimation of B1 excluding the two outlying cases. The results again confirm the influence of size, liquidity, ownership spread, and industry on companies IFR practices. Across the four sub-models (A1, A2, B1, and B2) estimated in this study, size is shown to have a significant and positive impact on IFR practice. Larger firms are more likely to engage in IFR. This finding is consistent with those reported by Ashbaugh et al. (1999) in the US, Pirchegger and Wagenhofer (1999) in Austria, and Craven and Marston (1999) in the UK. It is also in line with the findings of a number of studies on hard copybased corporate disclosure (McNally et al., 1982; Hossain et al., 1995; Wallace and Nasar, 1995; Owusu-Ansah, 1998). It appears that larger companies are able to derive scale benefits from voluntarily using the Internet as a medium for financial disclosure and are less likely to be competitively disadvantaged by such incremental reporting. Liquidity is positively related to IFR across the four models. It appears that companies which are relatively cash-rich are more likely to engage in IFR, taking advantage of the additional medium to communicate managements confidence in the companys solvency and future prospects. This result is consistent with that of Wallace et al. (1994), who found liquidity to be an incentive for voluntary disclosure in traditional print-based financial statements. Higher level of shareholding by the top 40% of shareholders was consistently negatively related to IFR practices in all four models. The combination of the finding relating to size and that of ownership spread
Blackwell Publishing Ltd. 2003.

56

P. Oyelere, F. Laswad and R. Fisher

suggests that IFR companies are not only large, but their shareholding is more widely dispersed. Incremental voluntary disclosure through the web could be viewed as an additional channel of communication set up by IFR companies to reach their more widely dispersed owners. This practice reduces such owners information costs and assists them in monitoring management behaviour. The statistically significant coefficients for industrial sector in two of the models provide additional insight into the factors that determine companies IFR practices. Cross-industrial differences in disclosure requirements have previously been reported to influence both conventional disclosure practices (see Owusu-Ansah, 1998) and the more recent practice of disclosing financial information on corporate websites (Ettredge et al., 2001). In this study, compared to the average across all sectors, companies in the primary industry group sector are more likely to engage in IFR. This result is similar to that of Ettredge et al. (2001), who found that US companies in the primary industry group sector, together with those in the services industry group sector, were more extensive users of IFR than companies in other industry group sectors. Overall, the result in this study is consistent with a political cost explanation. There is a significant body of literature which suggests a linkage between the political costs specific to many of the industries forming the primary industry group sector, such as oil and gas, steel, mining, chemicals, etc., and accounting choice (for example, Cahan, 1992; Cahan et al., 1997; Han and Wang, 1998). Internationalization, which was positively and significantly related to IFR practice at the univariate level was found to be insignificantly related at the multivariate level. There is a logical co-relation between a companys size and the spread of its ownership on the one hand, and its degree of internationalization, on the other. It appears that the effects of internationalization as an independent variable is now largely accounted for by size and ownership spread, two factors that are found to be consistently and significantly related to IFR in this study. To summarize, the results of multivariate analysis generally strongly and consistently support H1 (size), H3 (liquidity), and H5 (ownership spread). Support is also found for H6 (industry), but the results do not support H2 (profitability), H4 (internationalization) and H7 (leverage). 6. Summary and Conclusion The development of the Internet as a medium for global corporate communication creates a new channel for the dissemination of corporate financial
Blackwell Publishing Ltd. 2003.

Internet Financial Reporting in NZ 57 information. Due to its increasing usage, its multimedia capability and its capacity for interactive communication, the Internet is challenging the very nature of financial reporting, its boundaries, its frameworks, and even its fundamental role in society. The global access of financial reports on the Internet could produce further impetus for global standards for financial reporting. A significant proportion of companies have set up websites and some of them use their websites to provide financial information. This paper reports on the website practices of New Zealand-listed companies and the determinants of IFR practices among these companies. In particular, it builds on the comprehensive literature on voluntary reporting and uses a wider definition of IFR and a more comprehensive model of the determinants of IFR than previously employed in the IFR literature. The results of the study indicate that firm size, liquidity, industrial sector and the spread of ownership motivate the provision of IFR. The larger a company is, the more likely it is to set up a website and to use it for IFR. This finding suggests that large companies are deriving benefits from setting up websites and providing financial information on this medium. Companies with greater levels of liquidity are also more likely to engage in IFR. Likewise, the industry group sector of a company is a predictor of its likelihood of engaging in IFR, with companies operating in the primary industry group sector, such as those in the oil and gas, and forestry industries, are more likely to engage in IFR than companies from other industry group sectors. The higher the proportion of shareholding, by the top 40% of shareholders, the lower the probability that a company would provide financial information on the Internet. Although considerable literature suggests that disclosure levels in printbased financial reports are associated with other firm characteristics, no significant relationship was found between IFR and profitability, internationalization, and leverage in this study. This suggests that the IFR environment and culture is somewhat different from the traditional printbased financial reporting environment. These differences in reporting environments may reflect differences in cost, benefit, demand, and supply structures in such information environments. The lack of association between the adopting of the Internet for the display of corporate financial information and the internationalization of a company is particularly surprising, since it is expected that such companies would take advantage of the Internets ability for providing global access to the stakeholders of such companies. It is however noteworthy that significant positive relationship was found between internationalization and IFR at the univariate level,
Blackwell Publishing Ltd. 2003.

58

P. Oyelere, F. Laswad and R. Fisher

and its influence may have been subsumed within those of size and spread of ownership at the multivariate level. Future research may consider explanatory variables specific to the IFR environment, which may provide further insights into IFR practices. Such factors may include the age and levels of education of company directors/ managers, attitude of management to IT and new ideas, the age and strategic position of each company in its industry, and the stage in the life cycle of the companys major products. These factors may influence voluntary use of the Internet for financial reporting purposes. Also, researchers in this evolving area may investigate other disclosure-related issues such as the frequency and timeliness of IFR and the level of users interest and needs in respect of IFR, possibly measured by frequency of visits to corporate websites to download or view financial information. These issues are particularly pertinent as interest in continuous on-line reporting grows. Continuous on-line reporting is the practice by which firms provide financial or non-financial information simultaneous with, or within a short period of, the occurrence of relevant events. Our study is based on NZ practices; practices in other countries and international comparisons of determinants of IFR are useful in the development of a comprehensive predictive model for the choice of IFR. Notes
1. See for example, Craven and Marston, 1999 (UK); Pirchegger and Wagenhofer, 1999 (Austria and Germany); Trites, 1999 (US and Canada); Deller et al., 1999 (USA, UK and Germany); Hedlin, 1999 (Sweden); Gowthorpe and Amat, 1999 (Spain); and Fisher et al., 2000 (New Zealand). Lymer et al. (1999) also document an international comparison of IFR practices. 2. Ashbaugh et al. (1999) defines corporate IFR as the provision on a companys website of either (1) a comprehensive set of financial statements (including footnotes), (2) a link to its annual report elsewhere on the Internet or (3) a link to the U.S. Security and Exchange Commissions (SEC) Electronic Data Gathering, Analysis and Retrieval (EDGAR) system (p. 241). In New Zealand, there is no central archive for electronic financial information, similar to the US SECs EDGAR system. 3. For example, Bangladesh (Ahmed and Nicholls, 1994; Ahmed, 1996), Hong Kong (Tai et al., 1990; Lau, 1992; Wallace and Naser, 1995), India (Singhvi, 1968; Marston and Robson, 1997), Japan (Cooke, 1991, 1992, 1993), Mexico (Chow and Wong-Boren, 1987), New Zealand (Courtis, 1979; McNally et al., 1982; Hossain et al., 1995) Sweden (Cooke, 1989a,b), UK (Firth, 1979), and USA (Singhvi and Desai, 1971; Buzby, 1975; Malone et al., 1993). 4. For example, see Singhvi, 1968; Singhvi and Desai, 1971; Buzby, 1975; Davies and Kelly, 1979; Courtis, 1979; Firth, 1979; McNally et al., 1982; Chow and Wong-Boren, 1987; Cooke, 1989a,b, 1991, 1992; Tai et al., 1990; Hossain et al., 1994; Wallace et al., 1994; Hossain et al., 1995; Raffournier, 1995; Wallace and Naser, 1995; Inchausti, 1997; Marston and Robson, 1997; Patton and Zelenka, 1997; Owusu-Ansah, 1998.
Blackwell Publishing Ltd. 2003.

Internet Financial Reporting in NZ 59


5. These websites identify and provide links to the websites of New Zealand listed companies. As at December 1999, the Global Register site provided links to the websites of 14 of the 102 companies listed thereon, while the Knowledge Basket site is linked to 69 (out of 139) company sites. 6. Companies listed on the New Zealand Stock Exchange come from 13 different industry sectors. These single sectors are further grouped into 6 group sectorsPrimary (Mining, Forestry & Forest Products, Building Materials & Construction, Agriculture & Fishing), Energy (Energy Processing, Distribution & Utilities), Goods (Food & Beverages, Textiles & Apparel, Intermediate & Durables), Property, Services (Transport, Ports, Leisure & Tourism, Consumer, Media & Telecommunications, Finance & Other), and Investment. 7. A company is identified as providing financial information where it provides on the web a comprehensive set of financial statements and/or financial highlights extracted from such financial statements (including partial and/or summarized financial statements). The comprehensive financial statements may contain GAAP reconciliations where New Zealand companies are also listed on foreign exchanges. For example, in compliance with the SECs FORM 20F disclosure requirements, New Zealand companies registered in the US provide in notes to the financial statements reconciliation of New Zealand-GAAP to US-GAAP where the amounts are materially different. 8. A random sample of the financial data collected from this source were crosschecked against other sources (Datex database or Annual Report hard copies) to validate their accuracy. 9. Datex is a database of New Zealand listed company information, including annual report extracts and data such as daily share prices and dividends. 10. Deviation contrasts are used for the categories of the industry variable in subsequent logit analyses. Unlike indicator contrasts, which compare each category to the reference category, deviation contrasts compare each category other than the excluded category (investment industry group sector in this study) to the unweighted average of all categories. 11. The Tolerance statistics relating to the independent variables were reviewed. In accordance with Menard (1995, pp. 6567), these statistics were produced as output from SPSS linear regressions using the same dependent and independent variables as used in the corresponding logistic regression models.

References
Ahmed, K., Disclosure Policy Choice and Corporate Characteristics: A Study of Bangladesh, Asia-Pacific Journal of Accounting (June 1990), pp. 183200. Ahmed, K. and J. K. Courtis, Associations between Corporate Characteristics and Disclosure Levels in Annual Reports: A Meta-analysis, British Accounting Review 31, (1999), pp. 3561. Ahmed, K. and D. Nicholls, The Impact of Non-financial Company Characteristics on Mandatory Disclosure Compliance in Developing Countries: The Case of Bangladesh, The International Journal of Accounting 29, (1994), pp. 6277. Ashbaugh, H., K. Johnstone and T. Warfield, Corporate Reporting on the Internet, Accounting Horizons 13, (1999), pp. 241257. Auditing Practices Board, Bulletin 2001/1: The Electronic Publication of Auditors Reports (January, 2001). Bagshaw, K., Financial reporting on the Internet, Accountants Digest, Issue 429 (The Institute of Chartered Accountants of England and Wales, 2000). Benston, G., The Differences and Effects of the SECs Accounting Disclosure Requirements, in H. G. Manne, ed., Economic Policy and the Regulation of Corporate Securities, (1969), pp. 2379.
Blackwell Publishing Ltd. 2003.

60

P. Oyelere, F. Laswad and R. Fisher

Brennan, N. and D. Hourigan, Corporate Reporting on the Internet by Irish Companies, Accountancy Ireland 30, (1998), pp. 1821. Buzby, S. L., Company Size, Listed versus Unlisted Stocks, and the Extent of Financial Disclosure, Journal of Accounting Research 13, (1975), pp. 1637. Cahan, S., The Effect of Antitrust Investigations on Discretionary Accruals: a Refined Test of the Political-Cost Hypothesis, The Accounting Review, 67(1), (1992), pp. 7795. Cahan, S., B. Chavis and R. Elemendorf, Earnings Management of Chemical Firms in Response to Political Costs from Environmental Legislation, Journal of Accounting, Auditing & Finance (Winter, 1997), pp. 3765. Cerf, A. R., Corporate reporting and investment decisions (Berkley, CA: University of California Press, 1961). Choi, F., Financial Disclosure and Entry to the European Capital Market, Journal of Accounting Research 11, (1973), pp. 159175. Chow, C. and A. Wong-Boren, Voluntary Financial Disclosure by Mexican Corporation, The Accounting Review 62, (1987), pp. 533541. Cooke, T., Voluntary Corporate Disclosure by Swedish Companies, Journal of International Financial Management and Accounting 1, (1989a), pp. 171195. Cooke, T., Disclosure in the Corporate Annual Reports of Swedish Companies, Accounting and Business Research 19, (1989b), pp. 113124. Cooke, T., An Assessment of Voluntary Disclosure in the Annual Reports of Japanese Corporations, The International Journal of Accounting 26, (1991), pp. 174189. Cooke, T., The Impact of Size, Stock Market Listing and Industry Type on Disclosure in the Annual Reports of Japanese Listed Corporations, Accounting and Business Research 22, (1992), pp. 229237. Cooke, T., Disclosure in Japanese Corporate Annual Reports, Journal of Business Finance and Accounting 20, (1993), pp. 521535. Courtis, J. K., Annual Report Disclosure in New Zealand: Analysis of Selected Corporate Attributes, Research Study No. 8, (Armidale: University of New England, 1979). Craven, B. and C. Marston, Financial Reporting on the Internet by Leading UK Companies, The European Accounting Review 8, (1999), pp. 321333. Davies, R. and G. Kelly, The Quality of Annual Report Disclosure in Australia and its Relationship to Corporate Size, Management Forum (December 1979), pp. 259273. Debreceny, R. and G. Gray, Financial Reporting on the Internet and the External Audit, The European Accounting Review 8, (1999), pp. 335350. Deller, D., M. Stubenrath and C. Weber, A Survey on the Use of the Internet for Investor Relations in the USA, the UK and Germany, The European Accounting Review 8, (1999), pp. 351364. Ettredge, M., V. Richardson and S. Scholz, The Presentation of Financial Information at Corporate Web Sites, International Journal of Accounting Information Systems 2, (2001), pp. 149168. Fekrat, M., C. Inclan and D. Petroni, Corporate Environmental Disclosures: Competitive Disclosure Hypothesis Using Annual Report Data, The International Journal of Accounting 31, (1996), pp. 175195. Firth, M., The Impact of Size, Stock Market Listing, and Auditors on Voluntary Disclosure in Corporate Annual Reports, Accounting and Business Research 9, (1979), pp. 273280. Fisher, R., F. Laswad and P. Oyelere, Financial Reporting on the Internet, The Chartered Accountants Journal (April, 2000), pp. 6872. Flynn, G. and C. Galthorpe, Volunteering Financial Data on the World Wide Web: A Study of Financial Reporting from a Stakeholder Perspective, Paper presented at the First Financial Reporting and Business Communication Conference, Cardiff, 1997. Gowthorpe, C. and O. Amat, External Reporting of Accounting and Financial Information via the Internet in Spain, The European Accounting Review 8, (1999), pp. 365371.
Blackwell Publishing Ltd. 2003.

Internet Financial Reporting in NZ 61


Green, G. and B. Spaul, Digital Accountability, Accountancy, International Edition (May 1997), pp. 4950. Han, J. and S. Wang, Political Costs and Earnings Management of Oil Companies During the 1990 Persian Gulf Crisis, The Accounting Review 73(1), (1998), pp. 103117. Hedlin, P., The Internet as a Vehicle for Investor Relations: the Swedish Case, The European Accounting Review 8, (1999), pp. 373381. Hodge, F., Hyperlinking Unaudited Information to Audited Financial Statements: Effects on Investor Judgements, The Accounting Review, 76(4), (2001), pp. 675691. Hossain, M., M. H. B. Perera and A. R. Rahman, Voluntary Disclosure in Annual Reports of New Zealand Companies, Journal of International Financial Management and Accounting 6, (1995), pp. 6985. Hossain, M., M. Lin and M. Adams, Voluntary Disclosure in an Emerging Capital Market: Some Empirical Evidence from Companies Listed on the Kuala Lumpur Stock Exchange, The International Journal of Accounting 29, (1994), pp. 334351. Hussey, R. and M. Sowinska, The Risks of Financial Reports on the Internet, Accounting and Business (March 1999), pp. 1819. Inchausti, B. G., The Influence of Company Characteristics and Accounting Regulation on Information Disclosed by Spanish Firms, The European Accounting Review 6, (1997), pp. 4568. Jensen, M. C. and W. H. Meckling, Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure, Journal of Financial Economics 3, (1976), pp. 305360. Koreto, R. J., When the Bottom Line is Online, Journal of Accountancy 183, (1997), pp. 6365. Laine, C., Get Better Acquainted with the Internet, Accountancy International Edition (October 1997), p. 96. Lang, M. and R. Lundholm, Cross-sectional Determinants of Analyst Ratings of Corporate Disclosures, Journal of Accounting Research 31, (1993), pp. 246271. Lau, A., Voluntary Financial Disclosure by Hong Kong Listed Companies, Hong Kong Manager (May/June 1992), pp. 1019. Louwers, T., W. Pasewark and E. Typpo, Silicon Valley meets Norwalk, Journal of Accountancy 186, (1996), pp. 2024. Lymer, A., Corporate Reporting via the InternetA Survey of Current Usage in the UK and Discussion of Issues, Paper presented at the First Financial Reporting and Business Communication Conference, Cardiff, 1997. Lymer, A., The Internet and the Future of Corporate Reporting in Europe, The European Accounting Review 8, (1999), pp. 289301. Lymer, A. and A. Tallberg, Corporate Reporting and the InternetA Survey and Commentary on the Use of the WWW in Corporate Reporting in the UK and Finland, Paper presented at the Annual Congress of the European Accounting Association, Graz, Austria 1997. Lymer, A., R. Debreceny, G. Gray and A. Rahman, Business Reporting on the Internet, International Accounting Standards Committee, November 1999. Malone, D., C. Fries and T. Jones, An Empirical Investigation of the Extent of Corporate Financial Disclosure in the Oil and Gas Industry, Journal of Accounting, Auditing and Finance 8, (1993), pp. 249273. Marston, C. and C. Y. Leow, Financial Reporting on the Internet by Leading UK Companies, Paper presented at the 21st Annual Congress of the European Accounting Association, Antwerp, Belgium 1998. Marston, C. L. and P. Robson, Financial Reporting in India: Changes in Disclosure over the Period 19821990, Asia-Pacific Journal of Accounting 4, (1997), pp. 109139.
Blackwell Publishing Ltd. 2003.

62

P. Oyelere, F. Laswad and R. Fisher

McCafferty, J., Investor Relations: How Much to Reveal Online, CFO (December 1995), p. 12. McNally, G. M., H. E. Lee and R. Hasseldine, Corporate Financial Reporting in New Zealand: An Analysis of User Preferences, Corporate Characteristics and Disclosure Practices for Discretionary Information, Accounting and Business Research 13, (1982), pp. 1120. Menard, S., Applied Logistic Regression Analysis, Sage University Papers Series: Quantitative Applications in the Social Sciences, No. 07-106 (Sage 1995). Myers, S. C., Determinants of Corporate Borrowing, Journal of Financial Economics 5, (1997), pp. 147175. Owusu-Ansah, S., The Impact of Corporate Attributes on the Extent of Mandatory Disclosure and Reporting by Listed Companies in Zimbabwe, The International Journal of Accounting 33, (1998), pp. 605631. Patton, J. and I. Zelenka, An Empirical Analysis of the Determinants of the Extent of Disclosure in Annual Reports of Joint Stock Companies in the Czech Republic, The European Accounting Review 6, (1997), pp. 605626. Petravick, S. and J. Gillett, Financial Reporting on the World Wide Web, Management Accounting (July 1990), pp. 2629. Pirchegger, B. and A. Wagenhofer, Financial Information on the Internet: A Survey of the Homepages of Austrian Companies, The European Accounting Review 8, (1999), pp. 383395. Raffournier, B., The Determinants of Voluntary Financial Disclosure by Swiss Listed Companies, The European Accounting Review 4, (1995), pp. 261280. Schipper, K., Discussion of Voluntary Corporate Disclosure: The Case of Interim Reporting, Journal of Accounting Research 19 (Supplement 1981), pp. 8588. Singhvi, S. S., Characteristics and Implications of Inadequate Disclosure: A Case Study of India, The International Journal of Accounting Education and Research 3, (1968), pp. 2943. Singhvi, S. S. and H. B. Desai, An Empirical Analysis of the Quality of Corporate Financial Disclosure, The Accounting Review 46, (1971), pp. 120138. Tai, B., P. Au-Yeung, M. Kwok and L. Lau, Non-compliance with Disclosure Requirements in Financial Statements: the Case of Hong Kong Companies, The International Journal of Accounting 25, (1990), pp. 99112. The New Zealand Business Whos Who: a Directory of Leading Business Houses of New Zealand, 1996, 37th edition, New Zealand Financial Press. The New Zealand Business Whos Who: a Directory of Leading Business Houses of New Zealand, 1997, 38th edition, New Zealand Financial Press. The New Zealand Business Whos Who: a Directory of Leading Business Houses of New Zealand, 1998, 39th edition, New Zealand Financial Press. Trites, G., The Impact of Technology on Financial and Business Reporting (Canadian Institute of Chartered Accountants, 1999). Trites, G. and D. Sheehy, Electronic Disclosure Making a Hit on the Net, CA Magazine (March 1997), p. 10. Wallace, R. S. O. and K. Naser, Firm Specific Determinants of Comprehensiveness of Mandatory Disclosure in the Corporate Annual Reports of Firms on the Stock Exchange of Hong Kong, Journal of Accounting and Public Policy 14, (1995), pp. 311368. Wallace, R. S. O., K. Naser and A. Mora, The Relationship between Comprehensiveness of Corporate Annual Reports and Firm Characteristics in Spain, Accounting and Business Research 25, (1994), pp. 4153. Watts, R. L. and J. L. Zimmerman, The Demand for and Supply of Accounting Theories: The Market for Excuses, The Accounting Review 54, (1977), pp. 273305.
Blackwell Publishing Ltd. 2003.

Internet Financial Reporting in NZ 63


Watts, R. L., Corporate Financial Statements, a product of the Market and Political Process, Australian Journal of Management 2, (1977), pp. 5375. Wildstrom, S. H., Surfing for Annual Reports, Business Week (April 1997), p. 10. Williams, S. and C. Ho, Corporate Social Disclosures by Listed Companies on their Web Sites: An International Comparison, The International Journal of Accounting 34, (1999), pp. 389419.

Blackwell Publishing Ltd. 2003.