Internet corporate financial reporting a study of quoted Nigerian companies

Transcription

1 African J. Accounting, Auditing and Finance, Vol. 2, No. 3, Internet corporate financial reporting a study of quoted Nigerian companies Ismaila Yusuf Bursary Finance Unit, Ahmadu Bello University, Zaria, P.M.B Zaria, Kaduna State, Nigeria kyismail@yahoo.com Abstract: Internet financial disclosures is not a new phenomenon in developed countries, this cannot be said of developing countries like Nigeria. In contributing to the discourse in internet financial reporting in developing countries particularly in Nigeria, the companies quoted on the Nigerian Stock Exchange were studied using an internet financial reporting index (IFRI). Multiple regression analysis was used to determine the relationship between (IFRI) and profitability, leverage, size, foreign listing and industry type. The empirical result indicates that the only variable that significantly determines the level of internet financial reporting is the size of the company. Keywords: internet financial reporting; disclosures; Nigerian stock exchange; NSE; quoted Nigerian companies; internet financial reporting index; IFRI. Reference to this paper should be made as follows: Yusuf, I. (2013) Internet corporate financial reporting a study of quoted Nigerian companies, African J. Accounting, Auditing and Finance, Vol. 2, No. 3, pp Biographical notes: Ismaila Yusuf graduated from Ahmadu Bello University, Nigeria and obtained his Bachelor of Science in Accounting with a Second Class Upper Division in He is qualified as an Associate Chartered Accountant of the Institute of Chartered Accountant of Nigeria (ICAN) in 2009 while working with Zenith Bank Plc, Nigeria. He proceeded for a Masters of Science in Accounting and Finance in Ahmadu Bello University, Nigeria and graduated in He left the bank in May 2012 and took up an appointment with Ahmadu Bello University Bursary Unit as an Accountant. He is also an associate member of the Association of Certified Fraud Examiners. 1 Introduction The world has become a global village and the internet has become the most veritable linkage between people and organisation across the globe. Organisations no more see themselves as playing in the local league but as participant in the globalised world. It has become a common phenomenon for companies to offer its shares to investors that are outside it country of residence and even get listed in exchanges outside their business location. In the days where notice of meetings and financial reports are sent through physical mail it will be thought as very expensive for a company with investors outside its country of residence. Copyright 2013 Inderscience Enterprises Ltd.

2 234 I. Yusuf Internet and its attendant technology has provides a platform where all interaction between investors and their companies can be done without physical activities. Today, general meetings where shareholders are believed to take decision can be attended by a shareholder without physically being there. Financial information from companies is now at shareholders finger tips and can be assessed at any time. A lot of companies have since discovered that the internet can provide a veritable base for increase disclosure to convince shareholders that they are acting optimally and following the industry trend so that shareholders will not view their non-disclosure on the internet as hiding something bad. Internet financial disclosures is not a new phenomenon in developed countries, it has been in existence in one form or the other for more than 15 years. This cannot be said to be same with developing countries like Nigeria. To the best of the researcher s knowledge, there are very few known works in the area of internet financial reporting in Nigeria. These are the works of Olotu (2009) internet financial reporting in Nigerian Deposits Banks, Sanni et al (2009) on internet financial reporting by commercial banks in Nigeria and Financial Reporting on the internet by quoted companies in Nigerian by Rafiu (2009). All of these researches basically looked at the availability of company website and the extent of financial disclosures these company websites have. Also aside the work of Rafiu (2009) the other works studied only the banking industry which has additional requirement for disclosures as required by CBN. This study intends to contribute to the growing literature in internet financial reporting especially in developing countries and Nigeria in particular, provide an update of current internet financial reporting practices and look at the companies on the NSE in line with most studies in developing economies (Davey and Hamkajohn, 2004; Aly et al., 2009; Almilia and Budisusetyo, 2008; Khan et al., 2006). The study will also find out if Nigerian companies use internet advantages and to what extent in interacting with their investors. 2 The concept of internet financial reporting Many researchers have offered different definition of the term internet financial reporting, for example, Craven and Marston (1999) states that a detailed annual report and a part of summary of annual report is an evidence of disclosure on the internet. FASB (2000) defined internet financial reporting as the method for operation, technique and other practices that are created to maximise the usage of website ability in channelling business information. Chan and Wickramasinghe (2006) defined internet financial reporting company as any company that disclose its comprehensive financial statement or linked to company annual reports through the internet. For the purpose of this study, internet financial reporting company is a company that has a website and presents its annual reports and other financial information on the website.

3 Internet corporate financial reporting 235 The term internet financial reporting have been examined using various terms, these terms include; corporate disclosure by internet, corporate internet reporting, corporate internet financial reporting, corporate online reporting, digital reporting, electronic online reporting, electronic-based financial reporting, internet accounting, internet-based business reporting, internet-based corporate disclosure, internet disclosure, internet financial disclosure, internet financial reporting, internet for financial reporting, internet reporting, internet on corporate financial reporting, online reporting, online corporate reporting, online financial reporting, web reporting, web-based accounting, web-based reporting, web financial reporting, and web-based corporate reporting (Ali Khan and Ismail, 2011). However, internet financial reporting have become the most popularly used term (Ali Khan and Ismail, 2010). 3 Theoretical framework Researches in internet financial reporting started as early as1996 with the work of Louwers et al. (1996) which focused on US, other researchers such as Booker and Galbreath (1997), Gowthorpe and Flynn (1997) also focused on USA. Later studies like Craven and Marston (1999) studies internet financial reporting in the UK, Hedlin (1999) conducted his studies in Sweden, Marston and Polei (2004) in Germany, Oyelere et al. (2003) in New Zealand, Chan and Wickramasighe (2006) in Australia. While most of the researches on internet financial reporting were conducted in developed countries, few studies conducted in developing countries include; Davey and Homkajohn (2004) in Thailand; Khan et al. (2006) in Bangladesh; Rafiu (2009) and Olotu (2009) studied internet financial reporting in Nigeria; Aly et al. (2009) in Egypt; Agyei-Mensah (2012) in Ghana. Prior studies explored agency and signaling theory believing that these theories explain companies usage of internet for financial reporting. In explaining agency theory as a reason for companies usage of internet reporting, Watson et al. (2002) states that shareholders will want to control the behaviour of managers through bonding and monitoring activities, so it is therefore important for managers to increase disclosure to convince shareholders that they are acting optimally. The signalling theory in the other hand believes that firms tries to adopt the same level of disclosures as other firms within the same industry because if they do not, it may be viewed by shareholders that they are hiding something (Craven and Marston, 1999). Internet financial reporting has its attendant benefits over the paper-based reports which include giving instant access to financial data and providing flexibility in time of access as against paper version (ICAEW, 1997). Green and Spaul (1997) believe that its presentation flexibility is less constrained as against the paper reports. Other internet financial reporting benefit as contained in studies like (Louwers et al., 1996; Trites and Sheehy, 1997; Trites, 1999) includes, providing users access to information by providing information that are tailored to their needs. It also reduces the cost of production and distribution as against paper-based annual reports.

4 236 I. Yusuf Studies in internet financial reporting have evolved from a descriptive research that characterised earlier studies to exploratory and empirical in recent researches. The descriptive research focused on the existence of websites among the sample companies studied and whether these companies posted some types of financial information on their websites (Louwers et al., 1996; Lymer, 1997a; Gowthorpe and Flynn, 1997). Exploratory research investigates the extent and mode of financial information disclosed on the internet by extending the range of internet financial reporting attributes that had been established by previous studies. Ali Khan and Ismail (2010) states that, internet financial reporting attribute consist of the dimensions to measure the level of internet financial reporting, such as content and presentation; content, timeliness, technology and user support; timeliness; general attribute, investor relation attribute/financial information, annual report attribute and others attribute; investors relation; reporting: required and voluntary; general attribute and financial attribute; content and usability; and accounting and financial information. In studying internet financial reporting, various researchers have developed disclosure indices in measuring the extent of disclosure. Pirchegger and Wagenhofer (1999) used four dimensions which includes content, timeliness, technology and user support in designing an instrument checklist to measure internet financial reporting. Content is said to measure the type or/and availability of company financial information. Timeliness looks at the timeliness of financial information provided which includes the availability of press release or stock price information. Technology examines the companies use of some the advanced internet disclosure features. User support, measures the design and layout of the websites. Cheng et al. (2000) also adopted the four dimensions of content, timeliness, technology and user support to develop a disclosure index. Turel (2010) developed an internet disclosure index (IDI) using 51 financial and non-financial item categorised into six (6) major themes which include financial information, corporate governance information, social responsibility disclosures, technological features, convenience and usability of websites and contact details and other information. Agyei-Mensah (2012) in studying internet financial reporting in Ghana adapted index developed by Almilia and Budisusetyo (2008) which contained 15 items basically relating to content of financial information. Ali (2010) developed a disclosure index of 21 items was based on attributes reviewed from literature relating to the content of financial information. All the above studies assess internet financial reporting of the companies studied by scoring companies based on the items checklist developed and dividing the total score obtained by a particular compared with maximum score to obtain that company s disclosure index. 4 Determinant of internet financial reporting Various researches have been conducted on the determinant of voluntary disclosures of which internet financial reporting is one. Notable researchers studied firm size (Aitken et al., 1997; Craven and Marston, 1999; Kelton and Yang, 2008; Wan Mohammed and Sulong, 2010; Ashbaugh et al., 1999; Almilia and Budisusetyo, 2008; Barako et al., 2006; Oyelere et al., 2003), ownership characteristics (Kelton and Yang, 2008; Eng and Mak, 2003), industry type (Amernic and Maicoco, 1981; Wagenhofer, 1990; Ettredge et al., 2001; Bonson-Ponte and Escobar-Rodriguez, 2002; Xiao et al., 2004), auditor s size (DeAngelo, 1981; Eng and Mak, 2003; Chen and Taggi, 2000). Others include

5 Internet corporate financial reporting 237 profitability (Pirchegger and Wagenhofer, 1999; Marston and Polei, 2004; Oyelere et al., 2003; Agyei-Mensah, 2012), foreign listing (Xiao et al., 2004; Debreceny et al., 2002). Ettredge et al. (2002), Ismail (2002), Xiao et al. (2004) and Debreceny and Rahman (2004) studied leverage as a determinant of voluntary disclosure. On the other hand liquidity as a determinant of voluntary disclosure was conducted with the studies of Abd El Salam (1999), Oyelere et al. (2003), Ahmed and Courtis (1999) and Aly et al. (2009). It is however noteworthy to state that the above studies have had mixed results while some determinant have been found to have positive association with voluntary disclosures by some researchers, other researchers on the other found no such association. This is as a result of the difference in economies that have been studied (Pirchegger and Wagenhofer, 1999). 5 Hypothesis development Determinant of voluntary disclosures and by extension, internet financial reporting were based on theoretical underpinnings such as the agency cost, political cost, signalling and information asymmetry and audit firm reputation. 5.1 Profitability Profitability is believed to influence the level of disclosure of a firm, this is so because management is more eager to provide information when the company is doing well than when it is performing below expectation (Lang and Lundholm, 1993). Since the performance of a firm has signalling effect, companies with good results are more likely to disclosure more information than those with bad results (Craven and Marston, 1999). Craven and Marston (1999) argue that poor performing firms will prefer to only grant access to accounting information to only determined users instead of providing it voluntarily. Agency theory also suggests that managers of profitable firms are more likely to disclose more information than those of less profitable firms believing that more information to shareholders will boost their compensation (Abd El Salam, 1999). Almilia and Budisusetyo (2008) also argue that signaling theory can be used to predict that firms that disseminate financial information on the internet are higher quality firms. Pirchegger and Wagenhofer (1999) studied the impact of profitability on voluntary disclosures and found a positive association. On the other hand Marston and Polei (2004) and Oyelere et al. (2003) found no association between profitability and voluntary disclosure. Ismail (2002) opines that profitability has effect on voluntary disclosure within a particular range. From the above the following hypothesis is formulated; H 1 Profitability has no significant relationship with internet financial reporting in NSE companies. 5.2 Leverage Agency theory has also been used to explain the relationship between leverage and level of voluntary disclosure. It is believed that an increase in leverage results in transfer of wealth from fixed claimants to residual claimants (Bonson-Ponte and Escobar-Rodriguez, 2002). Researchers such as Ismail (2002), Hossain et al. (1995) and Xiao et al. (2004)

6 238 I. Yusuf studied the relationship between leverage and voluntary disclosure and found association. Chow and Wong-Boren (1987), Ahmed and Nicholls (1994), Wallace et al. (1994), Raffournier (1995) and Oyelere et al. (2003) in their studies found no association between leverage and voluntary disclosures. This led us the hypothesis, formulated thus; H 2 Leverage has no significant relationship with internet financial reporting in NSE companies 5.3 Firm size Hossain et al. (1995) and Wallace and Naser (1995) in their separate studies used agency theory to explain the positive relationship between size of a firm and disclosure. Cooke (1989) on the other hand relied on political costs as an explanation for the relationship between firm size and disclosure, they argued that the a firm the more political costs such as regulation, nationalisation. Watt and Zimmerman (1978) stated that larger firms attract more public attention and more politically exposed than small firms. Xiao et al. (1996) explains that large companies are more likely to use IT to improve financial reporting in meeting the increasing demand for information than smaller ones. Ashbaugh et al. (1999) argue that economies of scale may encourage large firms to put reports on websites, this according to them is because larger firm requires larger and complex management information system and databases for management control purposes since they have more products and more complex network. Bonson-Ponte and Escobar- Rodriguez (2002) argue that larger firms may be able to assess more fund when they provide more voluntary disclosures. Ahmed and Courtis (1999), Barako et al. (2006) and Oyelere et al. (2003) in their study of size as a determinant of disclosures found association between size and voluntary disclosure. Based on the above argument we formulate hypothesis thus; H 3 Size has no significant relationship with internet financial reporting in NSE companies. 5.4 Industry type The industry in which a firm operates has been identified as a determinant of voluntary financial disclosure. Differences in level of disclosure of firm in different industries are likely to be as a result of industry-related disclosures (Wallace and Naser, 1995). Cooke (1989) citing signalling theory argues that disclosures could also arise as a result of level of voluntary disclosures by bigger firms within an industry, which leads to a bandwagon effect. Studies examining the relationship between industry type and disclosure have been undertaken by researchers such as Lymer (1997b), Brennan and Hourigan (1998), Ismail (2002), Oyelere et al. (2003), Xiao et al. (2004), Al-Shammari (2007) and Hussainey and Al-Nodel (2008) found significant positive association while Wallace et al. (1994), Patton and Zelenka (1997) and Craven and Marston (1999) found no association. The above formed the basis of the hypothesis formulated as thus; H 4 Industry type has no significant relationship with internet financial reporting in NSE companies.

7 Internet corporate financial reporting Listing status Firms with foreign listing are usually required to provide additional disclosures usually more than their domestic requirements to comply with the regulation of the foreign stock market (Cooke, 1992). Debreceny et al. (2002) argue that foreign listed companies have to disclosure more information so as to reduce information asymmetries between domestic and foreign investors. Debreceny et al. (2002) and Xiao et al. (2004) in their studies found a positive association between foreign listing and internet financial reporting. On the other hand, Oyelere et al. (2003) found no association. The above argument provided the basis for our hypothesis thus; H 5 Listing status has no significant relationship with internet financial reporting in NSE companies. 6 Sample The sample chosen for this study are the companies listed on the Nigerian Stock Exchange. The websites of the companies were accessed in the month of January 2013, through The Nigerian Stock Exchange Listed Companies Page on the internet and Google search. Only companies with website are taken at the first phase. The companies are thereafter examined to determine whether they have their local financial information on their website (e.g. those companies with parent company outside Nigeria usually do not have their local financials on their website). After the second stage we arrived at 84 companies which formed our sample. 7 Methodology We used the un-weighted dichotomous disclosure index; the decision to adopt this was made based on results from previous studies employing both weighted and un-weighted indices found substantially similar results (Xiao et al., 2004). Internet financial reporting index (IFRI) was developed with 18 items divided into four (4) major themes as developed by Cheng et al. (2000) and Pirchegger and Wagenhofer (1999) content of financial information, usage of internet technology, user support and friendliness and timeliness. Content of financial information contains 7 items relating to content of financial information, usage of internet technology contains 4 items relating to the company taking adequate advantage of internet technology, user support and friendliness relates to the ease of locating financial information on the site and related issues it contains 4 items while timeliness refers to the regularity of information update which contains 3 items. At the time of examining each of the items in the index and as discussed above, a dichotomous procedure was used. If a company disclosed an item of information which is included in the index on its web page, it received a score of one (1) and if it does not disclose such item it scores zero (0) item, a score of zero. However, two items have a little variation from this rule, this include the disclosure of annual report in HTML or PDF, any company that disclose in PDF gets one (1) while a disclosure in HTML attracts two (2) marks and also availability of abridged report attracts one (1) while full report attracts two (2), these were also adopted by (Ettredge et al., 2001).

8 240 I. Yusuf Then IFRI for each company was calculated by dividing the obtained scores by the maximum available scores for that company. In this study, the maximum possible score obtainable by a company is 20. Therefore, the disclosure index for each company was calculated as follows: Obtained scores by individual company IFRI = Maximum Available Scores (..,20) i e 8 Research model Multiple Regression analysis was used to determine the relationship between voluntary financial disclosures on the internet (IFRI) the dependent variable and the independent variables of profitability, leverage, size, foreign listing and industry type. The multiple regression model is formulated as below; where IFRI = β + ROA β + LEV β + IND β + LogTA β + Flisting β + ε (1) IFRI β 0 ROA LEV IND LogTA internet financial reporting index Intercept return on asset as proxy for profitability debt-to-equity as proxy for leverage financial or non-financial as proxy for industry type natural logarithm of total assets as proxy for firm size Flisting foreign or non-foreign listed firm as proxy for listing status ε error term. 9 Data analysis and discussion of findings 9.1 Descriptive analysis Table 1 presents the distribution of companies studied; it shows the number of companies with websites, those without websites and those with websites but does not report local financial information. Table 1 Distribution of websites Companies Numbers Percentage Without websites % With websites but no financial information % With websites and local financial reporting % With global websites and global financial reporting 7 3.7% Total % Source: Survey of websites of NSE companies

9 Internet corporate financial reporting 241 Table 1 showed at only two (47) companies representing 24.6% of the total sample population have no website while five (7) representing 3.7% have websites but the financial report presented are global not country specifics. On the other hand eighty-nine (89) of the companies representing 46.6% have websites and presents local financial reports. Table 2 shows that only 57 companies representing about 69% of the total companies have an IFRI below average of This is indicative of the extent of the non-usage of internet financial reporting by the companies on NSE. Taking a look at the individual companies that made up of the sample, we will observe that First Bank Plc and StanbicIBTC plc took the lead with the highest IFRI of 0.90 which signifies that the companies have provided 90% of the items as developed in IFRI. The table also shows that only 22 representing 61% of financial institution have a below average IFRI. However, financial institution represented by Stanbic IBTC and First Bank recorded the most impressive index of close to a 100%. This performance indicates a considerable growth in internet financial reporting in financial institution in Nigeria and internet financial reporting in the banking industry in particular. However, there is the need for more improvement especially as it relates to financial institution which is being watch by experienced and varied stakeholders. Of the 47 non-financial institutions on the NSE, 12 of them representing 26% of the non-financial institutions obtained IFRI above average of 50%. This is indicative extent of the desire of the non-financial institution to use the internet in interacting with their shareholders. Table 2 IFRI by companies studied Companies Websites IFRI FIRSTBANK IBTC FCMB OANDO STARCOMMS UBA ACCESS GUARANTY STERLNBANK FIDELITYBK MANSARD SKYEBANK TRANSCORP ZENITHBANK DANGCEM DIAMONDBNK DANGSUGAR JBERGER NAHCO Source: Survey of websites of NSE companies

10 242 I. Yusuf Table 2 IFRI by companies studied (continued) Companies Websites IFRI PZ ASOSAVINGS CONTINSURE DANGFLOUR GUINNESS AIRSERVICE NB CRUSADER HMARKINS UACN AGLEVENT BERGER CILEASING COSTAIN COURTVILLE FIRSTALUM FLOURMILL IHS NIGERINS PRESCO PRESTIGE REDSTAREX ROYALEX UBN UNILEVER UPL WAPCO WEMABANK AFROMEDIA BAGCO CAP CCNN CORNERST LIVESTOCK MBENEFIT NEM OKOMUOIL Source: Survey of websites of NSE companies

11 Internet corporate financial reporting 243 Table 2 IFRI by companies studied (continued) Companies Websites IFRI THOMASWY UNITYBNK ABBEYBDS FIDSON FO forteoilplc.com 0.3 FORTISMFB LINKASSURE MULTITREX OASISINS SOVRENINS UNITYKAP ABCTRANS ACADEMY CONOIL ETERNA LAWUNION MULTIVERSE PAINTCOM RTBRISCOE UNIONDAC UNIVINSURE AIICO EQUITYASUR MCNICHOLS PORTPAINT STACO TRANSEXPR Source: Survey of websites of NSE companies Table 3 shows the items used in the development of the indices and total scores from each items as obtained by the sample. 92% the sample companies on the NSE have the link to financial information not more than 2 clicks away. However, 82% have current financial report while 56% have their past annual report for at least 3 years. Of the companies studied 46% present their interim report on their websites while only 21% have their current interim report on their website.

12 244 I. Yusuf Table 3 IFRI by indices for the sample studied Indices Max score Score IFRI Content of financial information Availability of current annual report Availability of full/abriged financial report* Availability of online financial ratios Availability of interim reports Availability of at least 3 years past reports Availability of daily stock price Availability of at least 1 months past stock prices Theme total Usage of internet technology Usage of html/pdf format for reports** Usage of interactive tools Graphical presentation of financial information Availability of multimedia presentation of financial information (audio/video) Theme total User support and friendliness Link to financial information not more than 2 clicks Availability of investor relations contact Availability of investor relations page Availability of sitemap Theme total Timeliness of information Availability current interim reports Current press releases not more than one month Availability of financial report or press releases not more than a month Theme total Notes: *Companies with Abridged Reports are awarded 1 mark while those with full report get 2 marks. **Companies with reports in HTML get 2 marks while those with PDF get 1 mark. Source: Survey of websites of NSE companies Ettredge et al. (2001) Content of financial information has a score of 49% with only 11% in availability of at least one month past stock prices. Timeliness of information for the NSE companies as studied showed that 26% of the companies are up-to-date in the presentation of financial information. For instance, 21% of the companies have their current interim report on their websites, 33% have current press releases and 21% have current financial report that are not more than a month.

13 Internet corporate financial reporting 245 In the area of usage of internet technology, 18% of the companies studied present their annual reports in HTML only or HTML and PDF while 81% of the companies present their annual reports in only PDF formats. Only 10% of the companies have any form of interactive tools on their websites, 11% have any form of multimedia presentation of financial information in the form of conference call, podcasts, audio or video presentations. However, only 2% of the companies presented their financial information in any form of graphics. 9.2 Correlation analysis Correlation analysis was run to determine the correlation between the variables prior to running a regression analysis. The result of the correlation analysis is Table 4. Table 4 Correlation result computed from SPSS 13.0 Correlation IFRI ROA LogTA LEV IND Flisting IFRI Pearson correlation ** ** Sig. (two-tailed) N ROA Pearson correlation **.082 Sig. (two-tailed) N LogTA Pearson correlation.733** **.308** Sig. (two-tailed) N LEV Pearson correlation Sig. (two-tailed) N IND Pearson correlation **.347** Sig. (two-tailed) N Flisting Pearson correlation.339** ** Sig. (two-tailed) N Note: **Correlation is significant at the 0.01 level (two-tailed) Table 4 shows significant positive correlation of between IFRI and firm size (LogTA) at 0.01 level (i.e., 99%) confidence levels and a significant positive correlation of between IFRI and foreign listing at 99% confidence level. A positive correlation between IFRI and industry type was found but not significant. While the relationship between IFRI and leverage and IFRI and ROA was found to be non-existence. It is observed that there is the existence of relationship between the independent variables, which means there is the need to test for multi-colinearity.

14 246 I. Yusuf 9.3 Regression analysis Table 5 shows a multi-correlation coefficient R as which indicates that there is a strong correlation between the dependent variable IFRI and the independent variables profitability (ROA), size (LogTA), leverage (LEV), industry type (IndType) and foreign listing (Flisting). An R square of 0.58 means that 58% of the variation in IFRI is as a result of profitability (ROA), size (LogTA), leverage (LEV), industry type (IND) and foreign listing (Flisting). Table 5 Model summary b Model R R square Adjusted R square Std. error of the estimate a Notes: a Predictors: (Constant), Flisting, LEV, ROA, LogTA, IND b Dependent variable: IFRI Table 6 ANOVA b Model Sum of squares df Mean square F Sig 1 Regression a Residual Total Notes: a Predictors: (Constant), Flisting, LEV, ROA, LogTA, IND b Dependent variable: IFRI From Table 6, the regression equation was found to be statistically significant with (F = , p < 0.05). Table 7 Model Coefficients a Unstandardised coefficients B Std. error Standardised coefficients Beta t Sig. 95% confidence interval for B Lower bound Upper bound 1 (Constant) Collinearity statistics Tolerance ROA LogTA LEV IND Flisting Note: a Dependent variable: IFRI From Table 7, we found out that the only independent variable with positive and significant relationship with IFRI is the size of the companies as p < We can also obtain the regression equation as below; VIF IFRI = ROA(0.267) + LEV ( 0.012) + IND(0.007) + LogTA(0.148) + Flisting(0.129) + ε (2)

15 Internet corporate financial reporting 247 In order to test for multi-collinearity we looked at the variable inflation factor (VIF), as stated by Zikmund et al. (2010) a VIF in excess of five indicates a harmful multi-collinearity. However, none of the independent variable has a VIF in excess of 5, this means there is no existence of multi-collinearity. The empirical result on the other hand showed that there is no significant relationship between leverage and internet financial reporting, profitability and internet financial reporting, industry type and internet financial reporting and foreign listing and internet financial reporting. The size of the company on the other hand has a significant positive relationship with internet financial reporting. Therefore, hypothesis H 1, H 2, H 4, and H 5 are accepted while H 3 is rejected. Finding on the relationship between profitability and IFRI is consistent with the findings of Marston and Polei (2004) and Oyelere et al. (2003), in consistent with the finding on industry type and IFRI is also the work of Craven and Marton (1999) and findings on leverage and foreign listing are consistent with the work of Oyelere et al. (2003). 10 Conclusions As much as the use of internet in the presentation of financial information have been very welcome and embraced in most developed countries and some developing countries, Nigerian companies especially those listed on the Nigerian stock Exchange have not make optimum usage of it. There is the need for these companies to take advantage of the advanced internet technologies available in effectively interacting with their investors. However, financial institutions especially banks have taken the lead in the usage of internet for financial reporting to extent of some banks taking adequate advantage of the internet technology. This is as a result of the stringent rules on disclosures and competition in the industry. Most of the banks are compelled by disclosures made by other banks to follow suits in order to convince shareholders and depositors that they are not hiding anything. It is also pertinent to note that the quality of website design needs to be improved. Some of the companies websites are basically designed as a replica of the paper-based financial report. Most companies perceive the web financial information as a mere additional medium of interacting with their investors. Timeliness in the provision of financial information is still not adequate, because the timeliness in updating information relevant to investors will boost investors confidence and the company s reputation. Close to or even 100% timeliness is not too much since it is comparatively easier and less costly in updating internet financial information when compared to paperbased. The empirical result from the hypothesis testing indicates that the only variable that significantly determines the level of internet financial reporting is the size of the company, this proves that the bigger the company the more likely it will be willing to disseminate it financial information on the internet. This is likely to be as a result of the wider stakeholder the company has or it interest in carrying along with the wider potential shareholders.

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