An Empirical Study of the Impact of Internet Financial Reporting on Stock Prices

33 Pages Posted: 13 Sep 2007

See all articles by Syou-Ching Lai

Syou-Ching Lai

National Cheng Kung University

Cecilia Lin

University of Portland

Hung-Chih Lee

National Cheng Kung University

Frederick Wu

University of North Texas

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

Lai, Syou-Ching and Lin, Cecilia and Lee, Hung-Chih and Wu, Frederick, An Empirical Study of the Impact of Internet Financial Reporting on Stock Prices (September 2007). Available at SSRN: https://ssrn.com/abstract=1014140 or http://dx.doi.org/10.2139/ssrn.1014140

Syou-Ching Lai

National Cheng Kung University ( email )

No.1, University Road
Tainan
Taiwan

Cecilia Lin (Contact Author)

University of Portland ( email )

Portland, OR 97203
United States

Hung-Chih Lee

National Cheng Kung University ( email )

1 Ta-Hsueh Road
Tainan, 701
Taiwan

Frederick Wu

University of North Texas ( email )

1155 Union Circle #305340
Denton, TX 76203
United States

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