An Empirical Study of the Impact of Internet Financial Reporting on Stock Prices
33 Pages Posted: 13 Sep 2007
Date Written: September 2007
Abstract
This study examines whether internet financial reporting (IFR) provides information that is quickly reflected in the stock prices, investigates whether IFR provides financial information that has a significant impact on stock prices, and explores whether the information provided with extended IFR has a significant impact on stock prices. Akaike's (1969) method of Final Prediction Error (FPE) is adopted to determine the lag length of each firm's stock price affected by its own past stock prices. The results show that the lag lengths of the firms with IFR are significantly less than those without the IFR. Second, the results from the event study methodology show that the cumulative abnormal returns of the firms with IFR are significantly higher than those of the firms without IFR. Lastly, the results indicate that firms with a higher degree of information transparency yield a higher abnormal return on their stock prices.
Keywords: Internet Financial Reporting (IFR), Information Content, and Information Diversity
JEL Classification: M41, M45
Suggested Citation: Suggested Citation
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