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70 Afro-Asian J. Finance and Accounting, Vol. 2, No. 1, 2010 Copyright 2010 Inderscience Enterprises Ltd.

. The perceived importance of electronic sources of financial information to individual investors in Egypt: an empirical investigation Abdelmohsen M. Desoky College of Business Administration, University of Bahrain, P.O. Box 32038, Kingdom of Bahrain E-mail: a.desoky@buss.uob.bh Abstract: This research aims to investigate empirically the perceived importance of various sources of financial information in relation to various investment decisions in the market, and to explore how the new source, electronic sources of financial information (ESFI), stands in relation to them. This study examines the issues from the perspective of individual investors, as a main group of users. Despite the extensive use of ESFI and their websites, especially by individual investors, there has been no research regarding the usefulness of this new source in Egypt. It has been observed that most previous studies focused predominantly on corporate reports (CR) and other traditional sources. In order to gather the data needed for testing related hypotheses, two methods were employed: structured interviews using a questionnaire that was delivered to 120 individual investors, and content analysis of ESFI websites. There was a clear finding that individual investors ranked ESFI as the most important source of information, followed by specialised newspapers and magazines as second, with CR third in importance. Keywords: corporate reports; CR; electronic sources of financial information; ESFI; internet financial reporting; IFR; internet; Egypt. Reference to this paper should be made as follows: Desoky, A.M. (2010) The perceived importance of electronic sources of financial information to individual investors in Egypt: an empirical investigation, Afro-Asian J. Finance and Accounting, Vol. 2, No. 1, pp.7087. Biographical notes: Abdelmohsen Desoky obtained his PhD in Accounting from the University of Hull, England. He is working in the Accounting Department, South Valley University, Egypt. Currently, he is an Assistant Professor of Accounting at University of Bahrain. His research interests include accounting disclosure, financial reporting, internet financial reporting and accounting standard setting.

1 Introduction and statement of the problem In Egypt, as in most countries, there are several sources of financial information. Among the available sources are corporate reports (CR); specialised newspapers and magazines; electronic sources of financial information (ESFI); direct contact with the company; tips and rumours; and advisory services. In addition to traditional sources of financial The perceived importance of electronic sources of financial information 71 information, ESFI are a recent source that supply financial and non-financial information about the Egyptian stock market in general and listed companies in particular. Most of the above sources are frequently investigated in the accounting literature, whether in Egypt (e.g. Desoky, 2004; and Rawy, 2004) or outside (e.g., Epstein and Pava, 1993; Anderson and Epstein, 1996; Bartlett and Chandler, 1997). However, it is critical to re-evaluate the perceived importance of such traditional sources in the light of the existence of the new source, ESFI. The topic of usefulness of financial information sources is at present particularly significant in Egypt with regard to the economic changes implemented in the last two decades and the contemporary changes in financial reporting practice. To accelerate its steps towards economic reform, the Egyptian government issued a package of important laws, among them, the Capital Market Law (CML) No. 95 of 1992 issued by the Capital Market Authority (CMA), which was the first comprehensive legislation to regulate Egypts stock market and streamline all pre-existing regulations. This law presented a package of disclosure requirements that applied for the first time in Egypt. As a

consequence of the above wide-ranging changes, the Egyptian stock market has been activated and users needs for accounting information have rapidly increased. Consequently, accounting disclosure requirements have been changed to meet these increased needs. This research aims to investigate empirically the usefulness of sources of financial information especially ESFI in relation to various investment decisions in the market. The main aim is broken down into several objectives: to investigate the importance attached to sources of financial information in the light of the existence of the new source, ESFI, and explore how this new source stands in relation to other sources; to explore how respondents experience in the market affects their perceptions of the importance attached to sources of financial information; to select and examine a set of criteria to be used in the evaluation of ESFI as a new source. The current research is important since information is essential for the functioning of a stock market. Financial and non-financial information not only assist in reducing uncertainty in investment decisions, but also improve the market transparency to investors and other users of such information. Despite the extensive use of ESFI and their websites especially by individual investors, there has been no research regarding the usefulness of this new source in Egypt. Most previous studies investigated the importance attached to CR and other traditional sources before the existence of ESFI. Furthermore, the study provided insight into the current lack of criteria in website performance

measurement, especially ESFI websites. Egypt is the focus of the current study. Egypt, which is an Arabian, MiddleEastern, and African country, is an important and leading country in the Middle East. It has traditionally played an essential role in Middle Eastern politics (Merrill Lynch, 1996). Its economists and academics have great influence on other countries in which Arabic is the mother tongue (Sayigh, 1978). These characteristics give this study a special importance, since the results could be applicable to a wide range of countries. Wallace (1988) argued 72 A.M. Desoky that the experience of a developing country may assist in clarifying the nature of financial reporting problems for other developing countries. Furthermore, in 2007, Egypt has been highlighted as the first market in Africa to market incentives in relation to foreign direct investment FDI (Ministry of Investment, 2008). Net FDI inflows increased from USD 509.4 million in 2000/01, to reach USD 6.1 billion in 2005/06, and USD 13.2 billion in 2007/2008. These substantive inflows have elevated Egypt as one of the leading FDI recipient countries of the African continent and the Arab world (Ministry of Investment, 2008). The Egyptian stock exchange is one of the oldest stock exchanges in the world, and the first one to be established in the Middle East. The Alexandria Stock Exchange was officially established in 1888 followed by Cairo in 1903 (National Bank of Egypt, 1992). The current study might provide evidence in two areas. First, the area of sources of financial information, which might help providers of financial information in improving

the current practice. Second, the evidence related to the perception of individual investors regarding each of the ESFI websites investigated in this study may assist both preparers and regulators of financial reporting in performing their role. Further, the result of this study is expected to add value to those who invest in the Egyptian stock market by obtaining needed information about the listed companies which may help them in making rational investment decisions. This is especially important since the Egyptian government, in the last two decades, has made a concerted effort to encourage investment by both local and foreign investors. Furthermore, website evaluation, as in the case of most information systems, is an aspect of their development and operation that can help in maximising the exploitation of invested resources (Adelman, 1991), and can also significantly contribute to their development that serve user needs and meet the user expectations to the maximum possible extent (Grigoroudis et al., 2006). This paper is structured as follows. Section 2 is devoted to the internet and ESFI in Egypt. Section 3 presents the literature review and hypotheses development. Section 4 presents the methodology. Section 5 contains an analysis of the empirical findings. Finally, Section 6 presents the conclusions. 2 The internet and ESFI in Egypt Massive changes initiated by the development and expansion of computer facilities and information technology (IT) have been quite substantial in the last two decades. This technological revolution takes another dimension when linking computer and communication industries (Olivier, 2000). The internet is radically changing the

dissemination and use of all types of information and knowledge resources. The rise of the internet is widely acknowledged as a key phenomenon of our times. It is a visible example of globalisation and the rise of knowledge economies (Halal and Taylor, 1999; IASC, 1999). Individuals use the internet for a wide range of purposes. Accordingly, websites are being developed by organisations for a wide range of activities. The recent rapid developments of the internet and especially the World Wide Web have provided a user-friendly platform from which companies may, if they choose, communicate with a large and growing number of financial information users (Ettredge et al., 2001). These developments have changed the ways that companies relate to their shareholders, clients, suppliers, institutions, etc. In this respect, the accounting function The perceived importance of electronic sources of financial information 73 has been called upon to play a key role in the use of the new technologies in general, and of the internet in particular, to keep the external users informed of such information (Bonsn and Escobar, 2006). Access to the internet is growing quickly and the number of users of the internet around the world has increased tremendously. According to the International Telecommunication Union ITU, the number of internet users was more than 1,100 million by the end of 2006 (ITU, 2007). In Egypt, as in other parts of the world, the number of internet users has noticeably increased during the last few years to reach 6 million by the end of 2006, representing 8.4 users per 100 of population and 7.3 millions by the end of June 2007, representing ten users per 100 (MCIT, 2006). Nowadays, many companies around the world, regardless of size or other company

characteristics, make a variety of information available to the public through their internet websites. Indeed, it has been predicted (Elliott, 1994) that the currently accepted model of financial reporting might be replaced by electronic information systems providing financial and non-financial information about companies, not necessarily in the form of audited financial statements, which would be widely available via the internet. Under this scenario, decision-makers could decide on the types of information that are important, and then arrange the information as they see fit. Several studies have reported increases in the number of companies that use the internet financial reporting (IFR) (see Petravick and Gillett, 1996; IASC, 1999; FASB, 2000; Marston and Polei, 2004). They reported a rapid increase in the use of the IFR. However, the majority of usage was by listed companies in developed countries (e.g., Craven and Marston, 1999; Bonsn and Escobar, 2006). As Hedlin (1999) noted, this usage varies between countries, and Asian, African, and South American companies lag behind North American and European companies in the use of the internet in the provision of financial and non-financial information. A possible reason behind this variation is differences in internet accessibility between developed and developing countries, or what is called the digital divide (Unerman and Bennett, 2004). The huge use of the internet by listed companies around the world is to be expected in the light of the great potential impact on various groups such as users, auditors and regulators. Therefore, it has been argued that the internet has the power to revolutionise external reporting

(Jones and Xiao, 2004). In Egypt, as in other countries, there are several sources of financial information. Among the available sources are CR; specialised newspapers and magazines; ESFI; direct contact with the company; tips and rumours; and advisory services. Taking into consideration that one of the most important uses of the internet is the provision of different information, many ESFI have been founded in Egypt for this purpose. Several advantages and disadvantages of ESFI provision of such information can be identified. For instance, ESFI could assist in solving some of the existing problems of financial reporting (such as those related to timeliness, verifiability and the cost/benefit of information). Timeliness can be improved by reducing time needed to distribute information and increasing the frequency of disclosure, since the costs for making such disclosures is relatively low. Further, devices such as hyperlinks to multiple sources of information can improve verifiability of information (Debreceny et al., 2002). In terms of cost efficiencies, the provision of financial information throughout ESFI may reduce the cost of publication paid by listed companies. It was argued that the cost of the production of reliable information remains. However, at least, the cost of publication is substantially 74 A.M. Desoky reduced (Olivier, 2000). Moreover, the financial information provided is flexible in format because it can be presented by many advanced data presentation methods such as audio, video, graphic and imaging technology. For instance, financial information can be

presented in a number of different forms, including the hypertext mark-up language (HTML), excel, acrobat reader formats (portable document files or PDF), graphics files, and word documents. ESFI can also make financial information of listed companies more available for a wider range of users and may enable them to gather the needed financial information regarding many listed companies, sectors of the stock market, and the market in general in seconds and from a single source (one ESFI website). Also, they may help listed companies in providing a common level of disclosure to all stakeholders. This may reduce the information asymmetry problem among various groups of external stakeholders. This is now very important in Egypt, especially in the light of the noticeable governmental efforts for more regulation regarding the dissemination of financial information about listed companies. Conversely, ESFI provision of financial information may generate further problems such as those related to information quality and security (Olivier, 2000) and to the audited status of the financial information provided. Most ESFI websites in Egypt focus on the needs of investors and other stakeholders and present financial and other corporate information (e.g., digital versions of the traditional paper-based CR), press releases, and articles concerning both listed companies and the stock market in general (e.g., www.arabfinance.com; www.egidegypt.com; www.mistnews.com; www.mubasher.net). They provide information free of charge with the exception of some providers who require specific fees (paid monthly, quarterly,

and annually) regarding the additional service provided such as online trading information. ESFI websites vary in several aspects including nature, provider, contents, and type of information presented etc. Therefore, a number of ways can be applied to categorise them. For the purpose of this research, they can be categorised as follows: 2.1 Governmental and semi-governmental sources This category of ESFI is established and operated by governmental and semi-governmental providers such as the CMA cma.org.eg, the Egyptian Exchange EGX egyptse.com, Misr for Central Clearing, Depository, and Registry Company (MCDR) mcsd.com.eg. Therefore, information provided is normally free of charge and is broadly varied and the language used is Arabic. However, an alternative language (English) is available in most sources. Hypertext links are provided to most other governmental websites. Generally, information provided is in HTML, which is the primary format of developing websites. 2.2 Information services sources In contrast to the above, this category of sources is established and operated by business providers. Most sources in this category are private companies. Some sources (e.g., egidegypt.com; and mistnews.com) require users to pay a subscription in order to access specific information, especially for immediate access to online trading information. Information provided may include: market summaries, press releases and reports about Egyptian and other foreign companies, mutual funds, online stock trading data, technical The perceived importance of electronic sources of financial information 75

analysis etc. Other services such as the short message service (SMS) are also provided by several providers. Most of the information mentioned above is provided in HTML. 2.3 Financial press sources This category of sources is established and operated by press organisations. Information provided is originally issued in paper-based daily newspapers and weekly specialised magazines. They are available for users free of charge and provide a variety of information about the Egyptian economy, the stock market, and listed companies. Most of the information provided is also in HTML. ESFI and their websites should provide useful information for various user groups. Therefore, in the light of the time and money invested in creating, developing and maintaining ESFI and their websites, evaluation of their quality and usefulness is an important achievement. In this respect, Grigoroudis et al. (2006) argued that assessment of website quality has evolved as an important activity. However, evaluating ESFI and their websites is not an easy task, especially in the light of the variation among them. The current study uses an index of criteria to evaluate ESFI websites. 3 Literature review and hypotheses development In the light of the research objectives, related studies can be divided into two categories as follows: 3.1 Studies focused on the evaluation of sources of financial information Frequent contact with users of information sources is needed to assess their perceptions regarding the importance attached to CR and other sources and what financial information they include. The accounting literature presents many studies on the usefulness of various sources of financial information. However, conflicting evidence has

been provided. Chang and Most (1985) concluded that individual investors in the US ranked the CR as the most important source of information. On the other hand, individual investors in the UK and New Zealand rated specialised newspapers and magazines as the most important source, followed by stockbrokers advice and CR as the second and the third sources respectively. Similarly, Epstein and Pava (1993) concluded that CR was perceived as the most important source of financial information in the USA. Anderson and Epstein (1996) reported that investors in Australia and New Zealand ranked stockbrokers advice as the most important source for their investment decisions; investors in the USA ranked the CR as the most important source for their investment decisions. Similar results were reported in Jordan by Abu-Nassar and Rutherford (1996), in Saudi Arabia by Al-Razeen (1999), and in Egypt by Desoky (2004) and Rawy (2004) when they concluded that CR were ranked as the most important source of financial information. Further, it was reported that users experience affects their perceptions on the importance attached to sources of financial information (Desoky, 2004; Rawy, 2004). Also, Bartlett and Chandler (1997) found that specialised newspapers and magazines were the most important source while CR were perceived as the seventh source. 76 A.M. Desoky 3.2 Studies focused on the internet and evaluation of corporate websites A second category of previous research examines the use of the internet in voluntary disclosure, and evaluates and investigates the differences in the design and/or contents of

corporate websites. They select several criteria of internet usage, or aggregate them into one or a few main criteria (e.g., Pirchegger and Wagenhofer, 1999; Ettredge et al., 2001, 2002; Debreceny et al., 2002; Grigoroudis et al., 2006; Lee and Kozar, 2006; Bonsn and Escobar, 2006; Welling and White, 2006). The following is a brief review of some the related studies. Pirchegger and Wagenhofer (1999) analysed the use of the internet to provide financial information by Austrian companies and used four groups of criteria (content, timeliness, technology and user support) to evaluate company websites. From another perspective, Ettredge et al. (2001) investigated the IFR practices and developed a measure of website disclosure level based on points assigned to a list of financial information items that might be found on corporate websites. In Ettredge et al. (2002) investigated the dissemination of information for investors by corporate websites. A range of website characteristics was used to capture the level of information disclosed to investors at the site. A great deal of variation was found in both the frequency with which different items were presented at sites and the number of items presented at any one site. In another study, Grigoroudis et al. (2006) evaluated websites of three companies. It focuses on the analysis and assessment of the set of websites features (such as relevance, usefulness, reliability, specialisation, architecture, navigability... etc.) that affect the overall user satisfaction. In a field study, Lee and Kozar (2006) investigated the relative importance in website

selection of four groups of website quality factors, including 14 sub-factors (such as relevance, navigability, security, reliability, understandability, responsiveness, personalisation, and response time). Lastly, Welling and White (2006) examined the website performance measurement activities of a range of businesses and tried to determine whether there are common measures that can be successfully applied to rate the performance of Australian corporate websites. In general, the review showed that although the accounting literature (including previous studies in Egypt) provides extensive evidence regarding CR and other traditional sources of financial information, no evidence is given in the light of the existence of ESFI as a new source of financial information in Egypt. Further, although there are several studies interested in the evaluation of corporate websites, to the best of the researchers knowledge, no evidence is given about the evaluation of ESFI websites especially in Egypt. In the light of the foregoing discussion, the following research questions were generated: 1 What are the individual investors perceptions of the importance attached to sources of financial information and how do the ESFI stand in relation to other sources? 2 Are there significant differences in respondents choice of answers on the perceptions of the importance attached to each source of financial information? 3 Does respondents experience in the market affect their perceptions of the importance attached to each source of financial information? 4 How do individual investors evaluate available ESFI in Egypt? The perceived importance of electronic sources of financial information 77 Research questions 1 and 4 can be answered by using descriptive statistics while the other research questions (nos. 2 and 3) can be answered by testing the following two null research hypotheses:

H10 There are no significant differences in respondents choice of answers on the perceptions of the importance attached to each source of financial information. H20 There are no significant differences among respondent experience groups regarding the importance attached to each source of financial information. 4 Methodology To gather the data needed for this survey, two research methods were employed. First, structured interviews were conducted using a purposely designed and pre-tested questionnaire with closed ended questions. The target population of this survey was individual investors in the Egyptian stock market. The inclusion of individual investors in the current study is that they are a main group of users of ESFI and the Egyptian stock market is mainly dominated by individual investors. The interviews were conducted during July and August of 2006. All respondents (individual investors) were interviewed face-to-face, and each interview lasted between ten to 20 minutes. It was decided to use structured interviews because they have a high response rate and can be used to obtain a large amount of supplementary information. For instance, they were asked about the most used ESFI website in relation to their investment decisions. A total of 120 questionnaires were distributed in the structured interviews to a sample of individual investors. Thirty seven respondents expressed a preference to return the completed questionnaire by mail and a stamped self-addressed envelope was given to each of them for this purpose. Of the 37, 21 useable questionnaires were received, increasing the total number of questionnaires returned to 104. To meet the study

objectives, the selection of respondents for the structured interviews was based, as far as possible, upon their awareness of ESFI. Before being chosen for the interview, each respondent was asked whether or not he or she was aware of ESFI. Only those who expressed an awareness of ESFI were chosen for the survey. Others, not aware of ESFI, were excluded from the survey as they would not be able to evaluate the service. The first part of the questionnaire was devoted to background questions while the second part was about respondents perceptions concerning the importance of CR and other sources of financial information including ESFI in relation to their various investment decisions in the market (question 2.1), and of the 25 criteria selected to be used in the evaluating of ESFI websites (question 2.2). A five-point response scale was used in the second part, with 1 meaning completely unimportant and 5 meaning very important. Second, a type of content analysis, using an index of 25 criteria that were initially developed based on literature review, discussions with users aware of ESFI, and investigation of the available ESFI in Egypt, was carried out for ESFI websites. The existence of each of the selected criteria was examined for each website of selected ESFI. The criteria used are divided into several main groups (see Table 6) including: 1 content/financial information and press releases about listed companies; 78 A.M. Desoky 2 user support and technology 3 general criteria. Content analysis has been used in several studies concerning the evaluation of websites (Pirchegger and Wagenhofer, 1999; Perry and Bodkin, 2000). Based on the survey

results, weight was given to each criterion in the selected set of criteria. In addition to ESFI websites used in many brokerage firms in Egypt, a number of the most popular search engines (e.g., AltaVista, Google, Lycos, and Yahoo) were used to find other ESFI websites. They searched on the internet for the homepages of available ESFI interested in the Egyptian stock market. Ten websites, representing those most used by individual investors in Egypt and most relevant to the current investigation, were chosen (see Table 7) and then investigated, in October 2006, to see if they met the criteria included in the index. This was a sufficient sample to allow detailed analysis and to be representative of the ESFI available and used in Egypt. To answer the research questions and to test the research hypotheses, the data analysis was carried out on two different levels: first, for the overall sample; second, for sub-groups constructed according to respondents experience in the market. The statistical package for social sciences (SPSS) was used to analyse the survey data. In addition to the descriptive statistics, a statistical analysis will be presented using some non-parametric tests such as the Chi-square Test and the Wilcoxon MannWhitney Test. Non-parametric techniques are ideal for data that is measured on nominal and ordinal scales (the case of the current survey), and useful when data does not meet the stringent assumptions of the parametric techniques (Sekaran, 2000; Pallant, 2001). 5 The empirical findings 5.1 The importance attached to sources of financial information As shown in Table 1, according to the mean score of each source, clearly, respondents as a whole ranked ESFI as the most important source (a mean score of 4.46 with the

lowest standard deviation of 0.501, which indicates the level of agreement as to the importance of such source). The reason behind that may be that in Egypt now, in contrast with several years ago, there are several important ESFI websites which might meet various information needs of individual investors. These websites are increasingly used by individual investors in the Egyptian stock market. This high usage may come from their being an easy and very low cost source of information and may reflect the high acceptance of these sources by individual investors. Although, ESFI were ranked the most important source, they faced some criticisms by users. For example, some investors complained that the use of such websites may mislead them through presenting information that gives a wrong impression about a specific company, sector, or the market in general. The second most important source was Specialised newspapers and magazines, with a mean of 4.27 and standard deviation of 0.740. This may be because in Egypt now, in contrast to a decade ago, there are several important specialised magazines and newspapers. CR, which were perceived as the most important source in several previous studies (e.g., Epstein and Pava, 1993; Al-Razeen, 1999, Desoky, 2004; Rawy, 2004), were The perceived importance of electronic sources of financial information 79 ranked third in importance (a mean score of 4.17 with a standard deviation of 0.717), suggesting a relatively low level of importance given to CR by individual investors. Advisory services were ranked fourth and The direct contact with the company as the

fifth in importance. The last source was tips and rumours. Table 1 Importance of sources of financial information (the overall sample) Sources Mean Std. D. Ranking 1 CR 4.17 .717 3 2 Specialised newspapers and magazines 4.27 .740 2 3 ESFI 4.46 .501 1 4 Direct contact with the company 3.81 .871 5 5 Advisory services 3.99 .940 4 6 Tips and rumours 3.11 1.023 6 In the light of the above results, the answer to the related research question (question 1), is that ESFI were ranked as the most important among the various sources of financial information by the overall sample. To test for significant differences in respondents perceptions, the chi-square for one sample test was used. It was used to know if any one choice of answer was favoured significantly more than the others. Table 2 below reveals the results of this test. Table 2 Chi-square results for importance of sources of accounting information (the overall sample) Sources Mean Std. D. Ranking 1 CR 12.365 2 .002 2 Specialised newspapers and magazines 62.923 3 .000 3 ESFI .615 1 .433 4 Direct contact with the company 44.846 3 .000 5 Advisory services 21.923 3 .000 6 Tips and rumours 42.250 4 .000 As all values of chi-square, with the exception of ESFI (0.433), were significant (p < 0.05), it is possible to say that respondents answers were not equally distributed among the different levels of perceptions of the importance of each of the sources of

financial information, except for ESFI. Therefore, the null hypothesis H10 should be rejected for all the sources with the exception of ESFI and the alternative hypothesis should be accepted. Consequently, the answer to question 2 is that there are significant differences for all sources of financial information except ESFI. 5.2 Effect of background variable (experience) Aiming to examine whether respondents experience affects their perceptions, their perceptions on the various sources of financial information will be analysed in relation to their experience, classified as group 1, individual investors with less than ten years of experience in the market, and group 2, individual investors of ten years and above. Because the Egyptian stock market has undergone major changes, during the last decade, 80 A.M. Desoky that have affected the needs of financial information by various user groups in general and investors in particular, it was decided to use the same period (ten years) as an appropriate break point between experience groups 1 and 2. Table 3 below clearly reveals, according to the mean of each source, that the two groups correspondingly ranked ESFI, specialised newspapers and magazines, and tips and rumours as the first, second, and sixth most important sources respectively. Moreover, other sources, such as CR and direct contact with the company, were ranked nearly similarly by the two groups. Table 3 Importance of sources of financial information respondent groups (years of experience) Sources Mean Std. D. Rank 1 CR 4.14 .687 4

2 Specialised newspapers and magazines 4.27 .802 2 3 ESFI 4.48 .504 1 4 Direct contact with the company 3.73 .840 5 5 Advisory services 4.16 .877 3 Less than ten years 6 Tips and rumours 3.02 1.000 6 1 CR 4.23 .768 3 2 Specialised newspapers and magazines 4.28 .640 2 3 ESFI 4.43 .501 1 4 Direct contact with the company 3.93 .917 4 5 Advisory services 3.73 .987 5 Ten years and above 6 Tips and rumours 3.25 1.056 6 The results of the Mann-Whitney test, used to find out whether there are differences between two groups, are reported in Table 4 below. The table indicates that there are no statistically significant differences, as all probability values are non-significant (p > 0.05), between the two groups for all sources with the exception of advisory services, which has a significant probability value (p < 0.05). Therefore, it is possible to accept the null hypothesis H20 for all sources with the exception of Advisory services and the alternative hypothesis should be rejected. Therefore, the answer to question no. 3 is that respondents experience in the market does not affect their perceptions of the importance attached to all sources of financial information, with the exception of advisory services. Table 4 Mann-Whitney test results of difference among groups (experience) Sources Mann-Whitney U Wilcoxon W Z Asymp. Sig. (2-tailed) 1 CR 1,185.500 3,265.500 685 .494 2 Specialised newspapers and magazines 1,234.000 2,054.000 339 .735

3 ESFI 1,204.000 2,024.000 588 .556 4 Direct contact with the company 1,110.500 3,190.500 .237 .216 5 Advisory services 954.000 1,774.000 .293 .022 6 Tips and rumours 1,113.000 3,193.000 .168 .243 The perceived importance of electronic sources of financial information 81 5.3 Comparing the results with the results of other studies In general, Table 5 below shows that findings of the current research are consistent with those of previous studies. For example, the results show that Specialised newspapers and magazines, which were perceived as an important source in previous studies, were given nearly the same rating in the current research. Further, CR was perceived as the most important source in several studies (Epstein and Pava, 1993; Abu-Nassar and Rutherford, 1996; Anderson and Epstein, 1996; Al-Razeen, 1999; Desoky, 2004; Rawy, 2004), but they were perceived as less important (third) in the current research. Furthermore, it is possible to conclude that a noticeable improvement in other available sources of financial information in Egypt such as ESFI and Specialised newspapers and magazines might affect the importance attached to CR by individual investors. Table 5 Comparing findings with other related studies Anderson and Epstein 1996 (4) Sources Epstein and Pava 1993 (3) USA Abu-Nassar and Rutherford 1996 (1) Jordan USA Australia

New Z. Bartlett and Chandler 1997 (5) UK Alrazeen 1999 (1) KSA Desoky 2004 (2) Egypt Rawy 2004 (2) Egypt The current research (1) 1 CR 1 1 1 3 3 7 1 1 1 3 2 Specialised newspapers and magazines 3832215232 3 ESFI - - - - - - - - - 1 4 Direct contact with the company -4----3325 5 Advisory services 3-344-4644 6 Tips and rumours -7----8576 Notes: (1) Ranking of the mean value; (2) ranking of the percentages and the mean value; (3) rank based on the percentages; (4) rank based on the percentages of users who base their decision on one of the sources; and (5) rank based on the percentages of users who read sources thoroughly. 5.4 Evaluating the ESFI In this study, 25 criteria were selected to be used in the evaluation of ESFI websites in Egypt. Table 8, below, reveals the mean score for each criterion. Not surprisingly, some

criteria were perceived as more important criteria, while others were perceived as moderate or less important. For instance, criterion no. 7, online trading information, 82 A.M. Desoky was perceived as the most important criterion with a mean score of 4.80 and a standard deviation of .510. This means that most individual investors are interested in this type of information being available in the ESFI websites. For this reason, almost all brokerage firms in Egypt are equipped with halls that offering online share trading information for their customers (individual investors) during trading hours. Other criteria (nos. 11, 6, 10, 1 and 3) were perceived as the second, third, fourth, fifth, and sixth in importance with mean scores of 4.77, 4.65, 4.62, 4.59, and 4.54 respectively. Surprisingly, the auditor report (no. 2), which should increase the level of confidence that users have in financial statements, was not among the five most important criteria as it was ranked 11th in importance. Criteria 14, 22, 24, 21, and 25 were perceived as the 21st, 22nd, 23rd, 24th, and 25th (the last) criteria in importance with mean scores of 2.95, 2.47, 2.39, 2.31, and 1.94 respectively. For instance, criterion no. 14, Additional language in the website, received a low mean score of 2.95. The reason behind this might be because most surveyed individual investors were Egyptians whose mother tongue was Arabic, while foreign investors deal directly from abroad with Egyptian institutional agents. In evaluating ESFI websites, a weighted index was utilised and the mean score for each criterion listed in Table 6 above were assigned a weight that best captured the

relative importance of the criteria measured. To develop an aggregated weighted score for each website of ESFI, 0 was assigned to each non fulfilled criterion, while the related mean score of each fulfilled criterion was assigned. Therefore, the aggregated weighted score can be interpreted as the total mean scores of the fulfilment of the criteria. Accordingly, the aggregated weighted score for each website is expected to lie in the range between zero (none of the 25 criteria was fulfilled) and 98.91 (all of the 25 criteria were fulfilled). The greater the value of the score, the higher the ranking of the ESFI website evaluated. To obtain the information required for the evaluation, the web page of each selected ESFI was visited and analysed. The collection of data was performed during a period of one month (October 2006). Table 7 below contains the scores of each elected ESFI website. The scores differ greatly for the different sources in general as well as within each single group, with the exception of group C. For instance, in the first group, egyptse. com obtained the highest score of 65.02 points out of a maximum score of 98.91 points, representing about 66% and then was ranked as the first, followed by cma.org.eg with a score of 28.99 points and mcsd.com.eg with a score of 20.97 points as the second and third respectively. This result suggests that both the CMA and MCSD need to improve their websites, especially as most of the information needed by individual investors is already available for the two providers. In contrast to the other websites in the group, cma.org.eg is the only website

that provides a large volume of important information about the Egyptian regulatory environment (e.g., regulatory procedures, Egyptian Accounting Standards, the Companies Act, and the CML). Regarding group B, the scores also differ greatly within the group. Figures in Table 7 show that website 5, mubasher.net, obtained the highest score of 88.11 of the maximum score representing about 89% and therefore is ranked most important website to investigate within the group. This source offers, in the same website, identical service for 9 other Arabian stock markets in eight Arabian countries. Furthermore, it is the only website that presents the full version of financial statements including the auditor report (criterion no. 2) and the notes to the accounts section (criterion no. 3) in PDF files for the most active companies. The perceived importance of electronic sources of financial information 83 Table 6 Results of evaluating criteria of the ESFI Groups of criteria Criteria Mean Std. D. Ranking 1 The financial statements 4.59 .617 5 2 The auditor report 4.46 .682 11 3 The notes to the accounts section 4.54 .723 6 4 Version of most recent interim reports 4.48 .724 10 5 Financial statements of previous years 4.28 .794 15 6 Daily and up-to-date share prices 4.65 .498 3 7 Online trading information 4.80 .510 1 8 Historical share prices 4.49 .557 9 9 Share price and/or indices graphing facility 4.52 .682 8 10 Financial analysis reports 4.62 .628 4 11 Press releases about listed companies 4.77 .446 2 12 Historical search facilities for press releases

4.39 .716 13 Content/financial information and press release about 1 listed companies 13 Calendar of events of interest to users 4.54 .652 7 14 Additional language 2.95 .979 21 15 Multiple file formats 3.78 .881 18 16 Updated recently 3.97 .875 20 17 SMS service for specific share prices 4.35 .707 14 18 Links to other related websites 4.13 .801 16 19 The possibility to print or download materials 4.39 .565 12 2 User support and technology 20 The possibility to order specific information 4.00 .870 17 21 About us and contact us 2.31 .956 24 22 Feedback 2.47 .870 22 23 Site map 3.10 1.000 20 General 24 FAQs 2.39 .818 23 3 25 Current number of visitors 1.94 .810 25 The PDF files can be read on screen, downloaded or printed in a form which looks exactly like the paper copy of the report. The use of the PDF file format gives several advantages such as: files are very simple to create from original documents; and documents cannot be inadvertently altered by users (FASB, 2000). Furthermore, arabfinance.com reached a relatively high score of 71.71 points and so was ranked as the second of all websites within the group. What is interesting to note is that egidegypt.com obtained a score of 58.36 points and was ranked in third place although this provider is the only one that has the right of dissemination of all CASE

data. 84 A.M. Desoky Table 7 Evaluation of ESFI in Egypt Group A2 Group B Group C Criteria1 1231234512 1 x3 x x x x x x 2xxxxxxxxx 3xxxxxxxxx 4xxxxxxx 5xxxxxxx 6xxx 7xxxx 8xxxx 9xxxx 10 x x x x x 11 x x 12 x x x 13 x x x x x 14 x x x x 15 x x x x x x 16 x x x x x 17 x x x x x x x x 18 x x x x 19 x x x x x 20 x x x x x x x x 21 22 x x x x x x x x 23 x x x x x x x 24 x x x x x x 25 x x x x x x x Total4 28.99 65.02 20.97 71.71 58.96 36.85 56.41 88.11 11.47 16.09 Rank 15 2 1 3 2 3 5 4 1 2 1 Rank 2 7 3 8 2 4 6 5 1 10 9 6 Conclusions The main aim of this study was to investigate empirically the usefulness of sources of

financial information especially ESFI as a new source in Egypt and to select and examine a set of criteria to be used in the evaluation of ESFI. Based on the data analysis presented earlier, there was a clear finding that respondents as a whole ranked ESFI as the most important source of information followed by specialised newspapers and magazines as second, with CR third in importance. Results of the statistical analysis indicated that there The perceived importance of electronic sources of financial information 85 are significant differences for all sources of financial information except ESFI. Also, respondents experience in the market did not affect their perceptions of the importance attached to all sources of financial information with the exception of Advisory services. Regarding the evaluation of ESFI websites, there was an obvious finding that the scores differ greatly for the different sources in general as well as within each single group with the exception of group C. There are several limitations related to this study. First, the number of respondents participating in this research survey was only 120, so generalisations will be drawn from only those respondents and only ten ESFI websites were investigated. These may not represent all of the possible ESFI websites. Second, the study focuses on service provided free of charge by ESFI. Third, websites of stock market forums that came out in the last few years, and are developed and managed by individuals, are outside the scope of the study. Fourth, as a result of the dynamic development of the internet, the findings of this

study offer only a snapshot of ESFI websites whose content and layout may be changed without notice. To achieve a high degree of temporal comparability, the empirical research was performed in a short time period of one month (October 2006). This paper makes some contributions. First, and most importantly, unlike previous research, which investigated user perceptions of CR in the light of other traditional sources of financial information, the current study extended this work by including new sources of financial information, such as ESFI. This was the first time that ESFI had been investigated in Egypt. Second, the evidence in the area of different sources of financial information, including ESFI, as a new source might help providers and standard setters in improving the current practice of financial reporting. Lastly, website evaluation may contribute to their development that serve user needs and meet the user expectations to the maximum possible extent. The current study suggests that private ESFI could provide CR in PDF format or any other format, in their free of charge services to be available for various users. Furthermore, governmental ESFI, especially egyptse.com and cma.org. e.g. should provide CR of listed companies in their websites especially that such reports are already available, according to listing rules and CML no. 95 of 1992, to the EGX and the CMA. The following are some suggestions for future research, for which the current study provides a basis. First, as the present study concentrates on the free of charge ESFI services, it would be interesting to conduct similar studies on the other services (paid

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