Download Web-Based Voluntary Financial Reporting of Jordanian Companies

International Review of Business Research Papers
Vol. 2 No. 2 October 2006, Pp. 127 - 139
Web-Based Voluntary Financial Reporting of
Jordanian Companies
Muther Talal Momany*and Salah Al-Dain Al-Shorman†
This paper investigates the extent of financial reporting on the internet
of the Jordanian companies listed in the first market on Amman Stock
Exchange (ASE) for the year 2004. This issue is motivated by the
growing concern with internet as a medium to disseminate financial
information from regulatory bodies e.g. IAS. After surveying the
internet and the companies' websites, the researchers find that about
(45%) of companies have websites. While (70%) of the website’s
companies report financial information, only (30%) don’t report any
financial information. Furthermore, companies report financial
information are classified into three categories as follows: about
(31.5%) report comprehensive set of financial statements, (15.8%)
report partial or summary financial statements, and (52.7%) report
financial highlights. On average, the results indicate that companies that
report financial information on their websites are larger, more leverage,
have more concentrated ownership, have more international investors,
and more recent than non-web-based companies.
Field of research: Accounting
1. Introduction
During the past five years the financial reporting on the internet witnessed an ever-increasing
growth in the companies adopted internet as a medium for voluntary disclosure, several
drivers prompt companies to adopt internet such as: cost saving, disseminating information to
a larger number of users and introduces new technologies for reporting. Internet has altered
the way amount of information flows from companies to investor and creditor; it has
expanded the amount of information available to interested parties, allowed delivery of that
information at no cost or very low cost, speed delivery, increase frequency quantity and
relevancy of both financial and non-financial disclosure and ease of access information
(FASB, 2000).
Due to the growing concern with financial reporting on the Internet, this study come out for
the purpose of investigating the extent of financial reporting on the Internet for 60
Jordanian companies listed on Amman Stock Exchange and highlights the importance of
financial reporting on the Internet.
*
Dr.Munther, Associate Professor of Accounting, Yarmouk University, Jordan, Email:
[email protected]
†
Mr.Salah, Lecturer, Department of Accounting , Al-Zaytoonah University,Jordan.
We gratefully wish to thank the Deanship of Research and Graduated Studies in Yarmouk
University for subsidizing this research.
Momany & Shorman
2. Objectives of the study
This study aims to examine the status of financial reporting of Jordanian companies listed in
the first market on Amman Stock Exchange, specifically the objectives of the study are: 1. To Survey the availability of websites for the Jordanian companies listed on the first
market of (ASE).
2. To determine the financial information reported by companies that has websites.
3. Try to explain the variation in financial information found in companies’ website.
3. Importance of the Study
To the best of the authors' knowledge, this is the first survey conducted in Jordan regarding
the status of financial reporting on the internet. It will highlight the importance of Internet
financial reporting and explore the status of Internet reporting of the Jordanian companies
listed on the first market of (ASE) and try to determine certain characteristics associated
with companies reporting on the internet.
4. Theoretical Background
The last five years witness a growth in the number of companies that use the Internet for
reporting as a type of voluntary disclosure in a sensei; it becomes a fast growing phenomenon
(Ashbauph at al., 1999; Oyeler et al., 2003). This phenomenon draws regulatory body’s
attention such as the IAS and Financial Accounting standards Board (FASB), and thus, they
begin to sponsor research projects concerning business reporting on the internet, and
furthermore, they encourage the use of internet to disseminate financial information. This
section aims to explain the motives beyond web-based financial reporting. And the risks
associated with it on the other hand.
4.1. Drivers for Change
First, Web information dissemination cost is cheaper than the cost associated with printedbased annual report. According to (Charles et al., 2003) printing & mailing is costlier' than
e-report, therefore, firms adopting internet financial reporting (IFR) can save this cost.
Ashbauph et al., (1999) confirm this result and indicate that the relative cost to establish an
internet presence for non-IFR firms is greater as proportion of their resources than IFR
firms,ii taken in consideration the size difference between IFR and non-IFR.
Second, IFR allows firms to communicate information to unidentifiable consumers, on the
contrary to the paper-based annual report which communicate information to selected group.
In this context, Ashbauph et al., (1999) indicate that financial information will become
public good with unrestricted global access by adopting internet as medium to disclose
financial information. According to (Charles et al., 2003) communicating information on
the internet will increase compliance with Regulation Fair Disclosure ("Reg FD") - a rule that
was adopted by the American Securities and Exchange Commission (SEC) on August
10,2000 - which requires companies to disclose information to the general public rather
than to selected market.
Third, improve financial disclosure by providing more timely information e.g. Jordan
petroleum refinery website provide daily stock price. Timely information accelerates decision
making process, adds value to the information (Lymer et al., 1999), increases markets’
efficiency, contributes in more fair allocation of resources, and reduces the cost investors
bear to obtain timely information (Ashbauph et al., p.249 1999).
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Fourth, increase frequency of financial disclosure. Company can communicates its results on
monthly or quarterly base e.g. monthly sales. Ashbauph et al. (1999) find that usefulness of
firms financial reporting on the internet depends on how it is easy to access that data, the
amount of data disclosed and whether the user can download or analyze this data.
Fifth, increase quantity of financial information, annual reports’ information (paper-based) is
summarized and simplified, using IFR allows firms to disclose disaggregated and incremental
financial data in their web sites (Ashbauph et al., 1999), e.g. Arab Bank Corporation
provide annual reports for 68 years.
Sixth, Internet tools ease the dissemination of financial information for users, analysts and
other interested parties such as Website browsers, hyperlinks, and information, all of these
techniques facilitate searching about specific data thus save time, integrate several section of
the annual report and link financial information to other pertinent information or nonfinancial information, and enable users to recover information (Ashbauph et al., 1999).
Seventh, internet introduces new technologies for reporting which makes sites more
interactive with investors, according to (Jones and Lymer, 2002) three of information
technologies will be increasingly used, hypertext, sound and visuals and real-time e.g. Arab
Cairo bank developed a real estate web-cast site mainly for promotion and marketing,
(www.cabestate.com). These technologies can be used to broadcast analyst conference calls,
present annual stockholders meetings in real time audio or even video, send a massage from
the chairman, and present the annual meeting ( Charles et al., 2003). For internal use,
Christina Gattenio said at financial executives international business reporting conference
“the average company spends more than half of its time trying to find the data it needs to
analyze”2 real-time information meant that manager can make quick decisions because the
data they needs is being constantly updated, Cisco system Inc. is implementing this process,
previously it spent (65%) of the time gathering data and (35%) of the time analyzing data,
now it is spending (35%) of the time gathering data and (65%) analyzing it.3
Eighth, internet provide a wide information (non-financial information and qualitative
information), non-audited information, social and environmental information, up-to-date
information about the company new events, pres releases, up-to-date information about the
company products and services which is costly to presents in hard copies, (Jones and Lymer,
2002).
Ninth, business become more complex, capital market become more, international,
regulation become more global, knowledge-based industries supersede traditional industries,
international finance and financial investment become more complicated (Jones and Lymer,
2002).
Tenth, enhancing disclosure serves the companies through, lower transaction costs, increase
interest in the company by financial analysts and investor, increase share liquidity and lowers
the cost of capital. (Mueller, 2000).
4.2. Risks Inherent in Internet Financial Reporting
Previous literatures touch on three types of barriers associated with Internet financial
reporting, 1- regulations and standards, 2-external audit, and 3- non-technological factors
1-Regulations and Standards, Till now there are no regulations or rules govern the disclosure
on the Internet. The (FASB, 2000) discusses these facts clearly, and indicate that the
evolving information on the internet is limited by the imagination by the people who creates
it and constrained by the same rule and regulation that govern the paper-based distribution
of corporate financial information, in addition, (Debreceny and Gray, 1999) emphasize this
fact, and indicate that the auditor report is direct conversion of the materials in the printed
annual reports, also (Jones and Lymer, 2002) suggest that the use of internet by companies
for reporting are largely routine. Since no regulation exist number of legal issues emerge,
(FASB working group, 2000; Laurie and Belevetz, 2000; Ashbauph et al., 1999;
Debreceny and Gray, 1999) discuss significant issues.
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Momany & Shorman
First, Inclusion of forward looking information, or incorporation of analysts' comments or
link to analysts' sites. Laurie and Belevetz (2000) indicate that including or providing a link
to analyst reports or any material written by others raise the possibility that court will treat
them as written by the company itself, it may cause the user to conclude that a company has
adopted or approved or endorsed the information in.
Second, Omits footnotes or one of the primary financial statements. Some companies
disclose only balance sheet and income statements, while other companies ignore the
importance of notes, which is considered integral part of financial statements.
Third, Company doesn’t mention the regulatory bodies that company financial statements are
in compliance with.
Fourth, Oral statements are subject to lower standard than written statements, e.g. company
may present real-time (oral) discussion on its website.
Fifth, Inadequate website security can result in unreliable information, e.g. hackers may place
or change material information, (Ashbauph et al., 1999) indicate that companies incurred
maintenance costs averaged $98625 yearly and exposed to 3.1 million “hits” per month to
their website.
Sixth, Companies may disseminate information without providing the posting date;
information will reveal as current while it’s expired e.g. press releases.
2-External Audit
(Debreceny and Gray, 1999; Ashbauph et al., 1999; Xiao et al., 2002) discuss several of
audit issues related to electronic dissemination of financial statements.
First, firms may report un-audited financial information, “Pages can quickly be changed to
reflect changes in the internal or external environment. This is the opposite of the
production model for a printed annual report” (Xiao et al., 2002, p.341) or provide link
from audited financial information to un-audited information which will reduce the reliability
of information.
Second, auditors’ reports are subject to change by the client or others, e.g. hackers.
Third, client has more control over auditor’s report than the audit firm since all auditors’
report is hosted by client not by auditor
Fourth, client and external organizations may use a link to auditor’s report for purposes
unintended by the auditor that appears as approved by auditor.
3-Non-Technological Factors
First, Economic issues. Cost of reporting on the internet is critical in determining the
existence of reporting on the internet, although there maybe cost saving, company may incur
access costs, e.g. cost of producing paper version and internet version, cost of litigation
which arise from un-audited disclosure.
Second, Behavior issues, lack of information skills and capabilities in Internet using and the
resistance of the change.
Third, cultural and social conflict issues, “The internet becomes a site where contending
social and cultural trends may crash with each other” (Xiao et al., 2002, p.252) e.g.
language, currency and GAAP.
4.3 Hyper Text Markup Language (HTML) versus Portable Document File (PDF)
“One of the most significant decisions in designing financial and business reporting Web
pages is the use of Hyper Text Markup Language (HTML) and Portable Document File
(PDF) file formats” (FASB, 2000, p.21). With respect to the importance of HTML and
PDF as medium for presenting financial information, it’s useful to differentiate between them
and know the advantages and disadvantages for each of them.
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HTML: - Hyper Text Markup Language, according to (Lymer et al., 1999) it's the language
used to add information to the content of a ‘page’ to describe how it should appear to the
recipient.
PDF: - Portable Document File “is a special file format, developed by the Adobe
Corporation, for creating documents that can look and print exactly like the original printed
document”. To view a PDF file, the user requires an Adobe Acrobat PDF Reader to be
installed on his or her computer (FASB, 2000, p.21).
Format
HTML
PDF
Advantages
Disadvantages
Can be viewed directly in the
Browser-requires no plug in
browsers may split tables and
pages
Is
an
standard
formatting
Document
printed
from
browser will probably not
look like original document
Can easily be hyperlink into
and out of HTML pages
Can require significant work
to convert original document
to HTML document in terms
of layout and design
When file is printed, it will
look exactly like printed
document on which it was
based
Even though it prints well,
because of the differences in
the aspect ratios of the
screen versus printed page, it
is difficult to read and to
navigate through PDF file
screen
Very easy to create from
original document
Requires Adobe Acrobat
Reader plug-in that users
must locate, download, and
install
Document
cannot
be
inadvertently altered by users
Can hyperlink out of PDF
files,
but
cannot
be
hyperlinked
into
specific
points inside a PDF file
open
Consists of very large files
that are slow to download
Information in not indexed
by search engines (e.g. Alta
Vista or Leoys)
Plugs –ins can be a security
risk, since they execute
automatically when users
select PDF file
Reader is based
proprietary format
on
a
Reader is currently free, but
may not be free forever
Source: Business Reporting Research Project, Electronic Distribution of Business Reporting Information, FASB,
2000
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5. Methodology
5.1 Sample Selection and Data Collection
This study covers the companies listed on the first market on Amman Stock Exchange at the
end of 2004; the authors have taken all the companies listed in (ASE) as the population of
this study due to the fact that the number of companies is too small and it is convenient to
collect the data related to it. The population consists of 60 companies divided into three
sectors according to (ASE) classification, 10 insurance companies, 18 service companies, 32
industrial companies; banks were excluded due to the fact that the authors found out that
they all have web-sites and comprehensive set of financial statements. Companies were
surveyed between October 2003 and September, 2005, to find out whether they have
websites or not. Two major search engines were used for this study, www.yahoo.com and
www.google.com, in addition to different public Jordanian sites such as Jordan Exports
Association, www.jordanexporters.org, Jordanian Export Development and commercial
Centers Corporations www.jedco.gov.jo and Amman Today, www.ammantoday.com .
If a company has a website further research was carried out to explore whether it
reports financial information or not, if it has financial information, components of its
financial information were documented. In the classification of companies, this study adopted
the methodology used by (Oyelere, Laswad and Fisher, 2003)‡; accordingly their
classification of companies is followed, therefore, in this study, companies were also classified
into three categories: 1-companies that have a website and report financial information, 2companies that have a website and do not report financial information, and 3- companies
without a website.
Companies that have a website and report financial information were further sub-classified
into three categories, 1- comprehensive set of financial statements, 2- partial financial
statements or summary financial statements, 3- financial highlights.
Companies without website were searched again by using different search engines and
different sites, to reassure the existence of its website or not.
To explain variation in the extent of financial reporting practices between companies via the
internet, various attempts were made by the authors to examine the impact of certain
characteristics on the companies reported financial information on its website, six variables
were selected, size, profitability, liquidity, leverage, ownership dilution, years in business,
and industry sector. Data regarding these variables were collected from the Jordanian
shareholding company's guide for the year 2004.
5.2 Measuring Financial Reporting on the Internet. The index established in this study was
developed in a manner that covers all the financial information reported on the internet
(comprehensive measurement) and provide appropriate classification, surveying previous
studies reveal that the measurements used in previous studies didn’t cover all the financial
information reported on the internet such as, (Ashbauph et al., 1999) used only
comprehensive set of financial statements and any links to annual report as definition for the
firm practicing internet financial reporting, while (Craven and Marston 1999) used detailed
annual report and parts or summaries of annual report as measurement for financial
information disclosed on the internet. They didn’t recognize financial highlights and/or
summary statements.
While (Oyeler et al., 2003) classified financial information reported on the Internet, by
grouping summary statements and financial highlights in one group, although summary
‡
They have taken all the 229 companies listed on the New Zealand Stock Exchange Market (NZSE) as
at the end of 1998. They classified companies into three categories on the basis of whether they provide
comprehensive annual financial statements only, financial highlights only, or both financial statements
or highlights.
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statements provide more information than financial highlights and it was required by the
U.K. companies’ act 1985, section 251.
For the reasons mentioned above financial information was classified into three categories.
1-Comprehensive set of financial statement: - the company is said to have a comprehensive
set of financial statements, if the company reported on its website, balance sheet statement,
income statement, cash flow statement, change in owner equity statement, footnotes and
auditor report, or have links to Amman Stock Exchange (ASE) or have a links to its annual
report.
2- Partial financial statements: - the company is said to have a partial financial statements, if
a company does not present one or more of the financial reports that’s mentioned above,
balance sheet statements, income statement, cash flow statement, change in owner equity
statement, footnotes and auditor report.
Summary statements: - the company is said to have a summary financial statements, if the
company provide summary results of its performance, e.g. presenting sales, net income, cost
of sales, total assets, and net cash flows comparatively with previous years or with the
previous year.
3-Financial highlights: - the company is said to have a financial highlights if company presents
key information, e.g. total assets, paid in capital, net income, and sales.
6. Analysis of results
Table 1 presents the distribution of website and non-website companies listed in the first
market on (ASE) by industry. Twenty-seven companies have websites, which constitute about
(45%) of the companies listed in the first market. The service sector has the highest
proportion of corporate websites, (50%) of the service companies have websites, compared
to almost (44%) in the industrial sector, and (40%) in the insurance sector. It is worth to
mention again that the researchers excluded the banking sector from this study after they
found out that all the banks in Jordan listed on the first market (15 banks) have websites
and all of them disclose financial information. This could be traced to several drivers that
prompt banking sector to adopt internet as a medium of Web-Based Voluntary Financial
Reporting more than other sectors, such as the following : 1- nature of business; banks
perform international operations intensively which encompasses international loans, letters of
credit, foreign exchange contracts and currency swap. 2- strong competition, which forces
banks to introduce more advanced services and intensify the use of technology, e.g. visa
cards, electronic fund transfer, paying bills, send drafts and balance inquiries on the internet.
Table 1
Industry distribution of website and non-website
Industry
sector
No. Of
% Of
companies Website industry
Nonwebsite
% Of
industry
E-Mail
% Of
industry
Insurance
sector
10
4
40.0%
6
60%
10
100%
Service
sector
18
9
50%
9
50%
18
100%
Industrial
sector
32
14
44%
18
56%
32
100%
Total
60
27
45%
33
55%
60
100%
In summary, (45%) of the companies listed on the first market of Amman Stock Exchange
have a website, the service sector provide the highest proportion compared to other sectors.
It could be said that service companies may have recognized the benefits if internet
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Momany & Shorman
technology faster and more than other industrial and insurance companies subject of the
study. This might be due to the fact that after privatizing many key service companies in
Jordan (e.g. Jordan Telecom, Jordan Electricity, 15 educational institutions …etc), an
observer can witness more varieties of services, very strong competition, more promotion,
and philanthropic activities. From the aforementioned, it could be concluded that service
companies with websites are using it to emphasize marketing strategies, to have competitive
advantage, and may be to enhance their corporate image (some telecom firms are offering
scholarships for poor students). This result is consistent with (Davey and Homkajohn,2004),
(Ashbauph et al.,1999), (Lymer et al., 1999) and (Jones and Lymer,2002).
Table 2 presents the distribution of financial information and non-financial information on
websites’ companies. Nineteen companies about (70%) of the websites companies have
financial information on their websites, while, eight companies about (30%) do not disclose
financial information on their websites. On industrial bases, (77.8%) of the service sector
companies (7 out of 9) present financial information on their web-sites, compared to about
(71%) (10 companies of 14) in the industrial sector and (50%) (2 companies out of 4)
in insurance sector.
Table 2
Distribution of financial information and non-financial information
Industry sector
No. Of
websites
companies
Website&
financial
information
% Of
industry
Website& nonfinancial
information
% Of
industry
Insurance sector
4
2
50.0%
2
50.0%
Service sector
9
7
77.8%
2
22.2%
Industrial sector
14
10
71%
4
29%
TOTAL
27
19
70%
8
30%
In summary, most of companies which have a website tend to present financial information;
this result is consistent with (Ashbauph, Johnstone and Warfield, 1999) findings. They
found out that companies with financial information consume less proportion of their
resource compared with non-financial information companies. As far as companies that did
not disclose financial information on their website are concerned, the researchers of this
study found out that they use their websites mainly for promoting and marketing their
products or services, answering costumers’ inquiries, presenting new events and providing
background about the company.
Table 3 presents the three categories of financial information provided at companies’
websites. Three major classification of financial information are identified, comprehensive set,
summary or partial financial statements and financial highlights.
About (32%) of the companies that report financial information provide a comprehensive
set of financial statements, the service sector has the highest proportion of corporations
(72%) that provide a comprehensive set of financial statements, followed by the industry
sector with (10%), and none in the insurance sector.
Three companies out of nineteen (about 16%) provide partial or summary financial
statements, while (52.7%) provide highlights, which represent the minimum level of
disclosure. Other financial information worth to mention presented on companies websites
such as, stock price, interim disclosure, archives for previous years financial statements (
which are useful for analysts or users who want to analyze companies’ performance over the
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Momany & Shorman
years), use graphic to support its financial information, present board of directors’ letter and
board of director members, and provide shareholders’ structure.
Table 3
Type of financial information
Industry
sector
No. Of
companies
Full
comprehensive set
% Of
industry
Partial or
summary
% Of
industry
Highlights
% Of
industry
Insurance
sector
2
---------
-------
-------
-------
2
100%
Service sector
7
5
71.5%
_____
_____
2
28.5%
Industrial
sector
10
1
10%
3
30%
6
60%
TOTAL
19
6
31.5%
3
15.8%
10
52.7%
Table 4 presents two classes of formats PDF and HTML, (21%) of the company’s present
financial information in PDF format compared to (79%) use HTML. (15.7%) of the full
comprehensive set companies present their financial statements in PDF, companies tend to
use PDF intensively when provide full disclosure because its cost is less than HTML and
provide as the same as the origin document, but it needs an Acrobat Reader to view the
company reports. (67.9%) of the companies that have summary or partial statements and
financial highlights use HTML when reporting financial information on their web sites since
HTML is more easier, can be opened directly, used more internationally, provide more
services and more developed than PDF. This might indicate that Jordanian firms subject of
this study use HTML more than New Zealand firms as reported by Oyelere et al. (2003).
Table 4
Distribution of financial information formats
Type of information
PDF
%
HTML
%
Full comprehensive set
3
15.7%
2
10.5%
Partial or summary
1
5.3%
3
15.7%
Highlights
-
0
10
52.2%
Total
4
21%
15
79%
Table 5 presents the descriptive statistics for financial information companies, non-financial
information companies and all companies, for the purpose of exploring the characteristics of
web-based companies. Companies without websites and companies that have websites but
without financial information were grouped together as Non-Financial information
companies, while companies report comprehensive set of financial statements or summary or
partial financial statements or highlights were grouped together as financial information
companies. Comparison between financial information companies and non- financial
information companies reveals that financial information companies on average are larger in
terms of total assets, and more leverage in terms of debt ratio. The profitability and liquidity
indexes (ROA, and current ratio), respectively, are almost the same between IFR companies
and non-IFR companies which might indicate that profitability and liquidity don’t represent a
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Momany & Shorman
motive for companies to use internet as a medium for voluntary disclosure. This result is
partially consistent with prior researches that find that firms with more disclosure policies are
larger, as indicated by Lang and Lundholm, (1993), Ashbaugh et al. (1999), Craven and
Marston (1999) and Oyelere et al. (2003). However, their findings indicated that IFR firms
are more profitable than non-IFR counterparts. The results of ownership dilution proxies
(ownership concentration, institutional investors, and shareholders who own 10% percent or
more) show that IFR companies are less diluted than non-IFR companies. In details, IFR
companies have highly concentrated ownership; each shareholder on average own 51,714.7
in comparison with 10,835 in non-IFR companies.
Table 5
Descriptive statistics
Variable
Statistics
Financial
Non-Financial
Information COM. Information COM.
ALL
Companies
Size
Total Assets
Mean
98,913,521
30,574,668.8
52,215,301.9
Std deviation
19,880,894
47,980,715.9
100,958,238
Median
19,880,894
10,252,574
14,577,708.5
Minimum
3,714,767
2,470,598
2,470,598
Maximum
564,429,604
247,651,535
564,429,604
Mean
6.7516
6.9320
6.87
Std deviation
10.8106
4.7214
7.12
Median
5.8
6.58
5.89
Minimum
-16.3
-.82
-16.3
Maximum
27.94
16.01
27.94
Mean
36.75
30.59
32.56
Std deviation
20.59
22.57
21.98
Median
35.17
25.34
26.54
Minimum
11.82
1.12
1.12
Maximum
74.8
92.14
92.14
Mean
.2235
.2314
.2166
Std deviation
.2375
.1956
.2077
Median
.1574
.1610
.1592
Minimum
.008
.002
.002
Maximum
.81
.72
.81
Mean
51,714.7
10,835.70
23,780.73
Profitability
Return on Assets
Leverage
Debt Ratio
Liquidity
Current Ratio
Ownership dilution
Ownership Concentration
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Momany & Shorman
Institutional Ownership
Std deviation
173,763.7
16,650.7
98,830.04
Median
7163
3818
5448.5
Minimum
700
411
411
Maximum
766871
92593
766871
Mean
59.3
44.7
49.29
Std deviation
24.6
20.58
22.79
Median
61.6
42.1
47.13
Minimum
17.6
7.79
7.79
Maximum
97.9
93
97.9
This is supported by the results of institutional investors and block shareholder ownership,
which indicate that they own 59% and 41.8% in IFR companies compared to 44.7% and
35.4% in non-IFR companies respectively. In addition, the results present that the average
number of international investors are more in IFR companies (41.8 vs. 12.1), the higher the
degree of internationalization the more the incentives to voluntarily disclose financial
information. This result is consistent with Oyelere et al., (2003) which indicated that IFR
firms appear to have a greater degree of internationalization than their non-IFR firms
counterparts.
Table 5 Continued
Variable
Shareholder who 10% or more
Statistics
Financial
Information
COM.
Non-Financial
Information
COM.
Companies
Mean
41.85
35.4
37.41
Std deviation
26.9
20.7
22.82
Median
40.1
32.58
34.23
Minimum
00
00
00
Maximum
94.53
82.05
94.53
Mean
41.8
12.1
13.19
Std deviation
19.2
14.3
15.92
Median
7.04
5.5
7.02
Minimum
.65
00
00
Maximum
65.63
56.4
65.63
Mean
22.05
26.43
24.23
Std deviation
15.15
14.73
14.83
Median
20.3
22.6
21.42
ALL
Internationalization
% of Foreign Investors Ownership
Years in Business
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Momany & Shorman
Minimum
6
8
6
Maximum
51
66
66
The results of years in business present that the average number of years of IFR companies
(22 years) is less than non-IFR companies (26 years), which might due to the fact that
newly established companies might have tried to utilize the latest available technologies that
can easily cope with any development in technology.
7. Summary and conclusion
During the past five years the financial reporting on the internet witnessed an ever-increasing
growth in the companies adopted internet as a medium for voluntary disclosure, several
derivers prompt companies to adopt it such as: cost saving, disseminating information to
larger number of users and introduces new technologies for reporting. Furthermore,
Regulatory bodies started to issue research projects concerning this phenomenon such as, IAS
and FASB and encourage companies to adopt it as a medium to exchange information.
This study come out to highlight the importance of financial reporting on the internet, as
Jordan comply with IAS, and to examine the status of financial reporting on the internet for
the Jordanian companies listed in the first market of Amman Stock Exchange.
Companies are surveyed to find out whether they have a websites or not, the findings
indicate that about (45%) listed in the first market of Amman Stock exchange have a
website. (70%) of the websites companies report financial information, while only (30%)
don’t report any financial information. Companies report financial information were classified
into three categories as follows, about (31.5%) report comprehensive set of financial
statements, (15.8%) report partial or summary financial statements, and (52.7%) report
financial highlights.
In addition to the above mentioned information, companies presented timely information
e.g., stock price, or historical information e.g., Archives for previous years financial
statement or sales promotions.
In addition, the authors find that on average companies report financial information on their
websites are larger, more leverage, have a concentrated ownership, have more international
investors, and more recent than non-IFR companies.
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Momany & Shorman
8. References
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Mueller, G. k. International Accounting. 2000. Eighth Edition. New York .
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Internet. Journal of Internet Law. pp. 20-26.
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Notes :
i
Lymer et al., (1999) define web-based reporting as “the public reporting of operating and financial
business data by a Business enterprise via the World Wide Web or internet-related communication
medium”. The FASB (2000, p.11) define the practices on the internet as “modes of operation,
techniques, and other practices designed to maximize use of the Web’s capabilities to distribute
business information”.
ii
The relative cost is defined as the cost of site setup divided by total assets
2
”some companies are already using real-time reporting internally”, investor relation business, jan, 14,
2002, pp, (4)
3
-the same previous source.
140