The Impact of Internet Financial Reporting on Stock Prices Moderated by Corporate Governance: Evidence from Indonesia Capital Market
30 Pages Posted: 27 Mar 2010
Date Written: February 23, 2010
Abstract
This study focuses on examining the impact of Internet Financial Reporting (IFR) on stock prices in Indonesia Stock Exchange. As stated by efficient market hypothesis (EMH), security prices at any time “fully reflect” all available information. If the market is true efficient, voluntarily financial information disclosed on web site would generates stock prices that reflect this kind of information. This study also investigates whether IFR companies have better financial condition than non IFR companies as predicted by signaling hypothesis. Previous study said that the use of internet as reporting tool indicates high firm’s quality because IFR firms are seen more up to date and advance in technology than traditional firms (non IFR firms). In addition, this study tries to explore the moderating role of corporate governance in increasing the value of IFR companies for the investors.
This study investigates all public companies incorporated in Kompas 100 index. Kompas-100 Index is an index of 100 shares of public companies traded on Indonesia Stock Exchange (IDX) that have high liquidity and high market capitalization. The results show that the degree of information discloses in website has significant positive impact on abnormal return. The t-test used to test any significant difference between IFR companies and non IFR companies shows insignificant result. Finally, the hierarchical regression test used to examine the impact of moderating variable, corporate governance, on IFR companies’ stock prices also shows insignificant result.
Keywords: Internet Financial Reporting (IFR), Abnormal Return, the degree of voluntary information disclosure, and Corporate Governance
JEL Classification: G14, G30
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Corporate Reporting on the Internet by Irish Companies
By Niamh M. Brennan and Denis Hourigan
-
Use of the Internet by Irish Companies for Investor Relations Purposes
By Niamh M. Brennan and Sorka Kelly
-
Financial Data at Corporate Web Sites: Does User Sophistication Matter?
By Michael Ettredge, Vernon J. Richardson, ...
-
The Management of Financial Disclosure on Corporate Websites: A Conceptual Model
By Samir Trabelsi, Réal Labelle, ...
-
Corporate Reporting on the Internet in a European Emerging Capital Market: The Greek Case