Internet Financial Reporting Of Companies Listed In Shanghai

Purpose – This survey investigates the determiners of Internet Financial Reporting ( IFR ) of companies listed on Shanghai Stock Exchange ( SSE ) . It provides a better apprehension of the fiscal coverage state of affairs in Shanghai ; therefore, taking to further development of Shanghai listed companies in on-line fiscal coverage.

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Design – 120 Shanghai Stock Exchange listed companies were selected from Shanghai Stock Exchange 180 Index companies. By the usage of content analysis, the Internet Financial Reporting companies were examined under 42 properties in five different countries. Three hypotheses were set to analyze the relationships between the concern nature and the degree of describing patterns.

Findingss – The consequences show that there is an obvious betterment of China Internet Financial Reporting patterns in footings of revelation range and engineering. The findings besides indicate there is a demand for accounting ordinances to set up a standardised Internet Financial Reporting pattern.

Originality/Value – IFR creates a new communicating channel to unwrap the fiscal information to stakeholders. The decisions indicate a continued development and betterment in China Internet Financial Reporting, which the consequences in SSE listed companies are consistent with other international IFR surveies.

Deductions – Through IFR, companies disseminate their concern state of affairs so as to keep good relation with their stakeholders. It is necessary for accounting parties to pay attending to IFR to safeguard stakeholders ‘ involvement and the “ true and just ” of the company information provided.

Keywords: Internet Financial Reporting, Shanghai Stock Exchange

Internet Financial Reporting of Companies Listed in Shanghai

Introduction

The application of the cyberspace in the commercial sector has been developed for over 15 old ages ( Pan, 2000 ) . It helps to bring forth up-to-date information with relatively low cost, and users are allowed to pass on and portion information online ( Wagenhofer, 2003 ) . This engineering opens up chances for fiscal revelation that allows all investors and hearers to reexamine the fiscal study through the Internet.

This survey is designed to supply a better apprehension of the Internet Financial Reporting ( IFR ) tendency and development in China through scrutiny of companies in Shanghai Stock Exchange ( SSE ) .

Motivation of the Study

Pan ( 2000 ) mentioned the publicity and ordinance of IFR for China listed companies started in 2000. Many companies began to present on-line fiscal coverage, but certain jobs such as revelation range and frequence emerged. At the same clip, there were few guidelines of on-line fiscal revelation for companies to follow ( China Securities Regulatory Commission, 1999 ) .

Importance of This Survey

Many listed companies unwrap fiscal information on their ain web sites, and this degree of revelation has continued to increase over the past few old ages ( Debreceny et al. , 2002 ) . Internet has become the primary beginning for users to seek for corporate fiscal studies ( Wagenhofer, 2003 ) . Internet fiscal revelation plays an of import function in fiscal coverage of listed companies.

With development of engineering, there is a great impact on companies to supply fiscal information. Report readers apply more corporate information for investing determinations ( Pan, 2000 ) . Most companies have taken advantage of emerging engineerings so as to ease concern operation. China is a big concern market ; hence it is of import to understand how the new Internet engineering helps to better the concern life, and to place the recent place of IFR in China.

Theoretical and Practical Contribution of the Study

Since the beginning 2000, China naming companies have been instructed to post one-year studies on Shanghai Stock Exchange or Shenzhen Stock Exchange web sites ( China Securities Regulatory Commission, 1999 ) . The on-line fiscal coverage environment has been well strengthened. Following Pan ( 2000 ) , Lodhia et Al. ( 2004 ) , Lybaert ( 2002 ) , and Allam and Lymer ( 2003 ) , the current survey has been conducted to look into the IFR state of affairs of Shanghai Stock Exchange.

This survey is intended to supply a better apprehension of the on-line fiscal describing state of affairs of listed companies on Shanghai Stock Exchange ( SSE ) , the largest stock market in Mainland China. It provides an assessment of the Internet fiscal coverage in Shanghai with mention to international accounting degree. In add-on, it is intended to analyze the tendencies of on-line coverage by analyzing the planetary benchmarks and users demand to the Internet fiscal coverage ; therefore supplying the motive for farther development of Shanghai listed companies.

Literature Review

With the growing of the Internet engineerings and increasing use of on-line fiscal informations, many companies have set up their ain web sites for describing fiscal information. Poon and Li ( 2003 ) stated that Internet Financial Reporting ( IFR ) created new challenges to direction, comptrollers and hearers for coverage and reexamining the fiscal information. There is no uncertainty about the hazard of disregarding IFR, and companies should guarantee there is an on-line coverage mechanism for supplying fiscal information that users desire.

Previous Research of Internet Financial Reporting

There is an increasing figure of academic research surveies look intoing IFR ( Pervan, 2005 ) . Pan ( 2000 ) is the first research on the IFR of companies listed in Shanghai Stock Exchange ( SSE ) . It studied the listed companies by utilizing Shanghai Stock Exchange 30 Index[ 1 ], 36 best listed companies[ 2 ]( in footings of fiscal revelation ) and 100 best listed companies[ 3 ]( in footings of market capitalisation ) . It found that 75 % of the 36 best revelation companies, 33 % of SSE 30 index companies and 20 % of 100 best companies were IFR houses in 2000.

This survey employs a comprehensive research method to mensurate the IFR degree of companies listed on SSE. Previous research work chiefly focused on the application of IFR in single states. Lodhia et Al. ( 2004 ) investigated the 50 largest companies in Australia in footings of market capitalisation. Similar research was carried out in Holland by Lybaert ( 2002 ) and found that a turning per centum of companies adopted IFR.

Comparative Research of IFR Disclosure across Different Countries

Allam and Lymer ( 2003 ) reported the findings of IFR across five developed states. They analyzed 50 companies from each state for a sum of 250 companies. The chosen states were the USA, the UK, Canada, Australia and Hong Kong, which represented the major international stock markets. The companies were chosen in each state based on market capitalisation. The writers besides introduced a benchmark to find IFR places of each state and it attempted to depict the relationship between assorted properties of describing companies and the IFR degree. This research brought out the findings of relationship between company size and IFR degree. Capital size and IFR degree were found to hold important relationships in those states studied, and this relationship was testified once more in the current survey.

Khadaroo ( 2005 ) compared the IFR state of affairss in Malaysia and Singapore for criterions puting intents. 100 companies quoted in Malaysia ‘s KLSE index and 45 companies for Singapore ‘s Straits Time were investigated. The consequences indicated that Singaporean companies make more usage of IFR than Malayan companies as the former is more developed.

Research of Factors Affecting IFR

Wagenhofer ( 2003 ) discussed the economic effects toward the IFR. The effects of new engineering and alterations in users ‘ demands and supplies of information consequence in alterations in IFR format. The writer referred to these as the Internet “ push ” and “ pull ” effects. For illustration, Internet offers high velocity and more entree to online information. This less expensive and easy available information may bring on users to demand more information. Therefore, it raises the inquiry of degree of information that should be disclosed. Despite the demand for information revelation, companies should mind of the security of on-line information. More on-line information revelation does non ensue in more benefits to IFR houses, and it may incur certain costs. Because of the increasing use of IFR, revelation format should be standardized. There has been the development of a particular concern coverage linguistic communication, extensile Business Reporting Language ( XBRL ) . XBRL provides comprehensive benefits of pull outing comparable information across companies and extinguishing redundancy.

Ismail et Al. ( 2007 ) looked at the booby traps of IFR and its possible bar by carry oning a study from 18 diverse articles and categorized into five sections. First, it argues that there should be a set of international regulations for regulating the on-line fiscal revelation, to keep transparence and creditability of the study, and to let direction and hearers that can work together to advance IFR development. Then, it brings out the assorted ways to research IFR chances and prevent hazards. In another survey, Oyelere et Al. ( 2003 ) found that house size, liquidness, industry sector and spread of shareholding are determiners for fiscal revelation on Internet.

Hypothesis Testing

Quantitative hypothesis testing is used to analyse the IFR companies listed on SSE in order to understand the challenges of IFR patterns. Many old research surveies were based on company size. Marston ( 2003 ) studied the IFR of Japan ‘s largest companies and discovered the inducement of fiscal information revelation on the Internet is related to the company size. The benefits of revelation over the Internet are likely to increase with the company size. Similarly, Oyelere et Al. ( 2005 ) found that company size is a determiner of acceptance of Internet fiscal coverage in New Zealand.

Since 2000, China ‘s listed companies have been required to post one-year studies to Shanghai Stock Exchange ( hypertext transfer protocol: //www.sse.com.cn ) or Shenzhen Stock Exchange web sites ( hypertext transfer protocol: //www.szse.cn ) . The on-line fiscal coverage environment has been well strengthened. Under this compulsory revelation demand, listed companies are required either to construct up their ain web sites for on-line fiscal coverage, or post the coverage subdivisions through the stock exchange web sites. Besides compulsory revelation demands, big companies can post voluntary fiscal information for investor relationship and corporate finance ( Chau and Gray, 2002 ; Liu and Chang, 2008 ) . Thus it is expected that:

H1: There is associated relationship between the company size and the content coverage of on-line fiscal revelation in China.

Cooke ( 1991 ) pointed out the being of a dominant company with high degree of revelation in a peculiar industry may hold a band-wagon consequence on the degree of revelation adopted by other companies in the same industry. To follow the norm, other companies in the same industry may supply more or less the same degree of revelation. Larran and Giner ( 2002 ) echoed the sentiment that companies in the same industry tend to keep the same degree of revelation in order to avoid making bad images to investors. In fact, the political costs every bit good as other costs ensuing from the loss of competitory advantages due to the revelation of information may change from one industry to another ( Giner, 1997 ) .

On the other manus, Marston and Leow ( 1998 ) stated that there is no important relationship between revelation of fiscal information and industrial categorization. Besides, Craven and Marston ( 1999 ) found no association between industry type and Internet revelation for the British companies. China Securities Regulatory Commission ( CSRC ) developed the industry categorization in 1992. Online fiscal revelation has merely become compulsory by 2000 ( China Securities Regulatory Commission, 1999 ) . Sing the current developing phase of fiscal coverage, clear relationship between revelation of fiscal information and industrial categorization is questioned. Thus it is expected that:

H2: There is no important associated relationship between the industry type of company and the content coverage of on-line fiscal revelation in China.

Company listed on a foreign stock exchange may impact the measure of information disclosed ( Larran and Giner, 2002 ) . The information revelation demands differ between states. Furthermore, if it intends to obtain the possible benefits from citation in foreign stock exchange, it will supply extra information on the Internet in order to pull investors ‘ attending. Cooke ( 1991 ) found that there was a positive and important association between citation position and revelation. However, Marston ( 2003 ) stated there were no important consequences of abroad listing for Nipponese companies. China Accounting criterions have been developed since 1994. The phase of standard development slowdown behind western states, such as the USA and the UK. Financial revelation is supposed to be less sophisticated than that of the western states. Therefore it is expected that:

H3: There is associated relationship between the company ‘s abroad stock listing position and its content coverage of on-line fiscal revelation in China.

Research Methods

Data aggregation of this survey was conducted in September and October 2008 to analyze the IFR state of affairs of companies listed on Shanghai Stock Exchange ( SSE ) . Similar to Pan ( 2000 ) , Allam and Lymer ( 2003 ) , Khadaroo ( 2005 ) and Khan, et Al. ( 2008 ) , secondary informations aggregation research method was used to analyze the intelligence, articles, and one-year studies of companies listed on SSE.

Contented analysis was adopted in this IFR survey. All informations were obtained by traveling through the web sites ; records were saved in roll uping the IFR information. It allowed assorted options for proving the selected companies and for comparing with the findings of old surveies.

Methods of Sample Company Selection

By mid-2008, SSE comprised of 860 listed companies ( hypertext transfer protocol: //www.sse.com.cn, 2008 ) . Many companies are from developed eastern states, and the others are from less developed western states. Unlike the Allam and Lymer ( 2003 ) study that was designed to supply geographic balance and a scope of advanced and developing capital markets, this survey does non supply geographic balance but focuses on industry grouping of companies in SSE. For pick of companies studied, representativeness was the premier concern. Shanghai Stock Exchange 180 Index companies have been chosen for survey ( hypertext transfer protocol: //www.sse.com.cn, 2008 ) . SSE 180 Index companies are components with the best representation of Shanghai Stock Exchange. SSE 180 is a benchmark index reflecting Shanghai market and functioning as a public presentation benchmark for investing and a footing for fiscal invention.

The current survey was conducted with mention to the 120 sample companies selected from SSE 180. The composing is updated every half twelvemonth by the SSE basing on company size and representativeness for ain industry. The 120 companies were selected utilizing graded random trying. The big sized companies were chosen from each of the 13 industry sectors as shown in Table 1. They capture extended IFR features that let significant grade of representativeness.

Table 1: Distribution of the 120 Sample SSE Companies across Major Industrial Sectors

CSRC Types of Industrial Sector[ 4 ]

Entire Company Number

Entire Company Number & gt ; 30 IFR tonss

Manufacturing

44

21 ( 47.7 % )

Communicationss and Transportation and Warehouse

14

11 ( 78.6 % )

Finance, Banking and Insurance

14

12 ( 85.7 % )

Mining

10

7 ( 70 % )

Power, Gas and Water Supply

7

3 ( 42.9 % )

Real Property

8

5 ( 62.5 % )

Information Technology

4

1 ( 25 % )

Social Servicess

4

2 ( 50 % )

Sweeping and Retailing

5

2 ( 40 % )

Agribusiness, Forestry, Livestock Breeding and Fishery

3

0 ( 0 % )

Constructing Trade

2

2 ( 100 % )

Mass Media and Cultural Legacy

1

0 ( 0 % )

Others

4

1 ( 25 % )

Entire

120

68 ( 56.7 % )

Measurement Design

The measuring of IFR was to analyze 42 properties for each company, and these properties were constructed by modifying the surveies from Pan ( 2000 ) , Allam and Lymer ( 2003 ) , Khan et Al. ( 2008 ) and Khadaroo ( 2005 ) . As China Accounting criterions bit by bit move closely towards International Accounting Standards, the properties of foreign IFR surveies in the yesteryear are relevant for mention.

The properties used in the research were categorized into five countries: ( 1 ) usage of Internet and handiness of web sites, ( 2 ) value of information disclosed on the web sites, ( 3 ) measure and format of describing published on the Internet, ( 4 ) content of the fiscal study, and ( 5 ) convenience of information published on the Internet. Development of this IFR mark for mensurating the revelation degree of different groups is necessary. It is used as a benchmark for companies in finding their comparative places of corporate coverage and comparing their IFR places over clip ( Allam and Lymer, 2003 ) .

The 120 sample companies have their ain company websites, and merely one company has no web site provided. Table 2 shows the elaborate consequences of the properties scrutiny in the five classs. It was found that over 87 % of the accessible company websites provide elaborate fiscal information and one-year study. It clearly points out the importance of IFR in China market, and it builds up investor dealingss by supplying information online.

Table 2: Datas Collection Results

Research

Target Group

SSE 180 Index Companies*

Measurement

Company Number

Entire %

Accessible Websites %

Accessible Report %

Entire Numberss of mark company

120

100 %

A

A

Part One

a. Company websites

119

99 %

A

b. Hyperlink with SSE

112

93 %

A

c. Accessibility to the web sites

113

94 %

A

d. Availability of English version

70

58 %

A

A

Part Two

a. Company background

113

100 %

A

B. Products and/or services

113

100 %

A

c. Press release

111

98 %

A

d. Electronic commercialism

31

27 %

A

e. Financial / operational information

109

96 %

A

f. Job employment

67

59 %

A

g. Organization civilization

70

61 %

A

h. Link to describe on home page

88

77 %

A

I. Feedback

63

A

55 %

A

Part Three

a. Handiness to one-year study

99

87 %

A

b. HTML or PDF format

99

100 %

c. Disclosure based on IAS

95

95 %

d. Full version of one-year study

95

95 %

e. Full version of interim study

92

92 %

f. Environmental study

33

29 %

A

g. Latest stock monetary value

65

57 %

A

h. Industry Statistics or Datas

79

A

69 %

A

Separate Four

a. Available of English

29

29 %

B. Previous fiscal twelvemonth information

97

97 %

c. Statement of managers

66

66 %

d. Corporate Administration

95

95 %

e. Customer/Market profile

58

58 %

f. Shareholder/Employee profile

96

96 %

g. Signed hearer Report

90

91 %

h. Balance Sheet

95

95 %

I. Income Statement

95

95 %

J. Cash Flow Statement

95

95 %

k. Statement of Shareholders ‘ Equity

93

93 %

l. Notes to the Account

88

88 %

m. Financial Ratios

69

69 %

n. Segment study

38

38 %

O. Voluntary revelation

25

A

A

25 %

Part Five

a. Ease of web-browsing

104

A

92 %

A

b. Download of one-year study

91

80 %

A

c. Search Box

65

57 %

A

d. Hyperlinks to associate web sites

80

70 %

A

e. FAQs

44

38 %

A

f. Contact method

113

A

100 %

A

Note: SSE 180 Index Companies* : 2/3 companies studied were researched during 15 September to 15 October 2008.

A

A

A

Use of Internet and Accessibility of Websites

The Chinese IFR ordinance was foremost established in 2000 ( Pan, 2000 ) . Not more than 40 % of SSE listed companies published their fiscal information on the Internet at that clip. In this survey, all the 120 sample companies under survey except one company ( Inner Mongolia Baotou Steel Union Company Limited ) have web sites for IFR. It indicates the importance of IFR in China for constructing up investor dealingss through the proviso of company information online. The SSE web site provides a brief corporate profile of all companies listed on the SSE. It besides provides links to companies own web sites for users ‘ convenience.

Types of Information disclosed on the Internet

About all the studied companies provide basic information about company background, merchandises and services and the fiscal / operational information. It reflects companies use Internet to advance their concern and topographic points high value on IFR in order to keep good relationships with their stakeholders.

Most of the companies even post imperativeness release subdivisions on their web sites. This development of wider online investor dealingss ‘ services indicates the desire of companies to vouch that the information is accurate, complete and timely ( Allam and Lymer, 2003 ) . Investors extremely depend on company intelligence and its proclamations to measure the corporate value.

For e-commerce, 44 out of the 120 sample companies are fabricating companies which rarely need to happen new clients through Internet. Therefore, fewer companies in this group ( 27 % ) provide on-line electronic services on their company websites.

Content of the Internet Financial Reports

As per the listing ordinance in China, IFR companies publish their latest fiscal statements, including balance sheet, net income and loss history, hard currency flow statement and statement of stockholders ‘ equity. Users presently expect companies to administer the most current information available about their activities and the latest fiscal information. The hearers ‘ study is besides an of import beginning of creditability and dependability for one-year coverage ( Allam and Lymer, 2003 ) . Investors merely place value to fiscal study signed by hearers. Therefore 91 % of the one-year studies contain hearers ‘ studies to keep creditability and dependability.

Information engineering allows companies to describe information in a timely mode and to supply it more often ( Lybaert, 2002 ) . It is found that 92 % of companies present interim or even quarterly studies in order for accounting information to be utile for determination devising. The timely and relevant accounting information better the IFR degree in SSE.

Datas Analysis

Measurement of the IFR degree

Table 3 provides descriptive statistics of IFR coverage. Together with the frequence tabular matter of informations shown in Table 2, a company can hit a upper limit of 40 points[ 5 ]and a lower limit of nothing for its ain IFR index. The mean mark of IFR degree is 28.07. As both the median and the manner of the investigated companies are 30, it is decided to put the mark of 30 as a standard degree of supplying high quality of information revelation on Internet for rating the IFR degree of SSE listed companies. The statistical analysis consequences provide description of the relationship between the measures of information and the IFR degree of company.

Table 3: IFR degree: Drumhead Consequences of 120 Sample SSE Companies

Statisticss ( Max = 40 )

120 Sample SSE Companies

Mean

28.07

Median

30

Manner

30

Standard Deviation

9.18

Maximum

40

Minimum

0

Consequences

Hypothesis 1 about Disclosure and Company Size

There were many statements in the former articles on the subject of the relationship between company size and its IFR. Allam and Lymer ( 2003 ) argued against this relationship and stated that it was non important for the UK, the USA, Canada, Australia and Hong Kong. However, Larran and Giner ( 2002 ) and Laswad et Al. ( 2001 ) believed that there was an association between IFR revelation and company size. Marston ( 2003 ) pointed out that there should be a positive relationship, but the relationship was equivocal.

Companies covered in this survey are representative in different industrial sectors. The consequences show that there is important relationship between the size of the companies and the IFR degree. The ( H1 ) hypothesis is supported. Table 4 demonstrates the correlativity of IFR mark with the company size steps. The three steps of company size in footings of market capitalisation, gross, and net net income after revenue enhancement all show important correlativity with IFR revelation severally.

Table 4: Correlation of IFR Score with Company Size Measures

Concepts

IFR Mark

Company Size ( Market Capitalization )

Company Size ( Revenue )

Company Size ( Net net income after revenue enhancement )

IFR Mark

1

Company Size ( Market Capitalization )

0.260**

1

Company Size ( Revenue )

0.251**

0.356**

1

Company Size ( Net net income after revenue enhancement )

0.270**

0.662**

0.793**

1

**Correlation is important at the 0.01 degree.

Hypothesis 2 about Disclosure and Industry Type

Companies listed on SSE can be classified into 13 major industrial sectors. The industry categorization was developed by China Securities Regulatory Commission ( CSRC ) . Table 5 shows the per centums of high degree IFR-firms across different sectors, and it helps to look into which industry provides more information on the Internet.

Table 5: IFR Scores of the 12 Industrial Sectors and Analysis of Variance ( ANOVA )

CSRC Industry

No.

Mean

Standard Deviation

Manufacturing

44

26.14

9.884

Communicationss and Transportation and Warehouse

14

31.64

7.459

Finance, Banking and Insurance

14

35.29

4.027

Mining

10

30.10

7.249

Power, Gas & A ; Water Supply

7

25.86

7.925

Real Property

8

27.38

11.006

Information Technology

4

22.50

11.475

Social Servicess

4

30.50

5.686

Wholesale & A ; Retailing

5

27.80

4.764

Agribusiness, Forestry, Livestock Breeding and Fishery

3

13.00

11.000

Constructing Trade

2

33.00

1.414

Mass Media & A ; Cultural Legacy

1

27.00

Sodium

Others

4

24.25

9.811

Entire

120

28.07

9.184

Analysis of variance

Disclosure mark

Sum of Squares

df

Mean Square

F

Sig.

Between Groups

2,089.031

12

174.086

2.344

.010

Within Groups

7,948.435

107

74.284

Entire

10,037.463

119

Larran and Giner ( 2002 ) argued that companies in the same industry tend to follow the same degree of revelation in order to standardise the bringing of information to the investors. In add-on, the third service industry is by and large more willing to supply accounting information through the Internet to users than the primary and secondary industries.

Similar to Marston ( 2003 ) ‘s findings, there was no important association between industry grouping and IFR revelation as shown in ANOVA analysis of Table 5. However, it is non surprising that Finance, Banking & A ; Insurance industry, Communications, and Transportation & A ; Warehouse industries have high per centums of IFR. Companies, notably banking and air hose companies, which need strong client relationships in order to keep their market place, normally provide e-commerce and other online services to their possible users. Primary and secondary industries show relatively lower per centums of IFR degree than the third service industry, except for fabrication companies and excavation companies. The strong authorities industrial ordinance is the ground of high IFR degree in China. Particularly for the Yangtze River, the Chinese authorities requires companies to unwrap their full operating information in order to protect the river from environmental pollution ( Baosteel Group Corporation, 2008 ) . Therefore, companies need to unwrap sufficient information, together with their environmental protection issues. Based on these analysis consequences, the ( H2 ) hypothesis is supported.

Hypothesis 3 about Disclosure and Global Listing

Of the companies listed on abroad stock markets, all the 28 abroad SSE listed companies are quoted on Hong Kong Stock Exchange. They provide sufficient on-line fiscal information in traditional Chinese. Besides Hong Kong Stock Exchange, 9 South southeast companies have their portions quoted on New York Stock Exchange, and another 2 South southeast companies have their portions quoted on London Stock Exchange. They present their one-year studies based on the listing ordinances of abroad stock exchanges. Table 6 shows there are important differences between the IFR tonss of SSE listing companies and abroad listing companies under Mann-Whitney, Wilcoxon signed-rank and Z-tests. Well, more revelation is required for naming in abroad markets.

Table 6: Statisticss of Listing Topographic point of the 120 Sample SSE Companies

Ranks

Disclosure mark

Listing Placea

No

Mean Rank

Sum of Ranks

Mann-Whitney

322.00

Shanghai Stock Exchange

92

50.00

4600.00

Wilcoxon signed-rank

4600.00

Oversea

28b

95.00

2660.00

Omega

-6.004

Entire

120

Asymp. Sig. ( 2-tailed )

.000

Grouping Variable: Listing Topographic point

B. Abroad listing positions overlap, with 28 in Hong Kong, 9 in New York, and 2 in London.

Larran and Giner ( 2002 ) stated that if companies intend to derive benefits from a foreign citation, such as the hazard variegation, the widening market and the addition beginnings of investing, it will hold to do extra attempts in regard of investor dealingss and fiscal information revelation. Most companies have high IFR degree and merely two of them are below the mean IFR degree. Abroad stock listing is found to impact the measure of information disclosed. Therefore hypothesis ( H3 ) is supported.

Decisions

This survey reports how the Shanghai Stock Exchange ( SSE ) listed companies implement Internet Financial Reporting ( IFR ) to show their corporate information. It indicates a continued development and betterment in IFR, and the research consequences in SSE listed companies are really consistent with other IFR surveies. Almost all the companies investigated have their ain web sites, exposing the latest concern information. Fiscal coverage through the Internet becomes one of the indispensable elements in pull offing successful concern.

This survey intends to give some penetrations into the factors that cause differences in the design and contents of the IFR. Three hypotheses were formulated and investigated whether there was important association with the content coverage of IFR. An IFR index was built to back up hypothesis testing.

The first hypothesis is about the being of a important relationship between the size of the company and the IFR content. Larran and Giner ( 2002 ) pointed out that the company size affected the range of information available for revelation. Some former research surveies reported that the relationship was equivocal or even non important between them. In this survey, it follows the same consequences from old research findings that there was a clear relationship between the size of the SSE listed companies and their IFR degree.

For the 2nd hypothesis about the industrial type, industrial grouping has been found non to exert important difference on IFR degree. However, there is grounds to demo companies in the same industry tend to keep the same degree of revelation, in order to avoid making bad images to investors ( Larran and Giner, 2002 ) . They discovered the service industry is more interested in supplying IFR content than the primary and secondary industries. Further research should look into a specific type of industry, based on the nature of the industry, the legal demand and the stakeholder engagement.

The 3rd hypothesis is the association of abroad listing and measure of information disclosed. This survey finds those abroad listed companies intend to do extra attempts in regard of investor dealingss and fiscal information revelation for pulling investors ‘ attending. However, this consequence differs from Marston ( 2003 ) ‘s survey. The difference can be attributed to the different civilization. Nipponese companies treat accounting as a tool for checking, and they tend to unwrap less information. Therefore, the local civilization should be considered before carry oning the hereafter IFR research.

Contribution of this Survey

The research is intended to supply a better apprehension of the fiscal coverage pattern of listed companies on Shanghai Stock Exchange, and it identifies the possible betterments in relation to Internet Financial Reporting. It tries to supply an assessment of the IFR in SSE. Besides, it is intended to analyze the tendencies of on-line coverage by analyzing the planetary benchmarks and users demand of the IFR ; therefore hopefully taking to further development of SSE listed companies in this country.

In add-on, this survey intends to set up the benchmark of IFR criterions in China. As the international accounting criterions were acquiring nearer but non wholly standardised, it is of import to develop a local benchmark for SSE listed companies to put an accomplishable, mensurable mark foremost, instead than straight set uping a planetary criterion without sing the differences in accounting patterns.

Deduction for Practice

Internet Financial Reporting influences the accounting profession and accounting criterions. Companies are required to circulate their concern state of affairs, in order to keep good relation with their stakeholders. Given that the debut of Internet creates a new communicating channel to unwrap the fiscal information to stakeholders, it is necessary for accounting parties to pay attending to IFR for safeguarding the stakeholders ‘ involvement and the “ true and just ” position of the information provided.

Restrictions of this Survey

This survey is subjected to several restrictions. First, the survey includes merely the 120 sample companies alternatively of all the SSE 180 Index companies. The representativeness could be farther improved. Second, the fundamental law of SSE index companies is capable to reexamine and alter every half twelvemonth. The on-line information is updated consequently, and hence, research informations aggregation should be completed in a short clip frame.

Recommendations for Future Research

Based on the research findings, it is of import to place the cardinal elements on IFR. This survey indicates that company size and abroad listing influence on-line accounting revelation. Further probe should concentrate on other company features, such as acceptance of International Financial Reporting Standards ( IFRS ) .

The international accounting criterion is indispensable for the hereafter IFR development ( Lu, et al. , 2009 ; Lugo, 2009 ) . It is necessary for China Institute of Certified Public Accountants ( CICPA ) to accomplish standardisation on IFR patterns, to supply a basic construction or criterion for companies to follow. The first measure is to put a local benchmark for companies to follow. Then a standardised IFR pattern would be built up through coaction with different states.

Future IFR surveies should mind of the local civilization. Different accounting patterns might act upon readying of fiscal statement and the accounting revelation. Last, farther probe should see the different intents of fiscal coverage, legal systems, corporate funding and relationship between revenue enhancement and fiscal coverage ( Nobes and Parker, 2006 ) . The different grounds of fixing fiscal coverage patterns would impact the on-line revelation degree, and it is necessary to calculate them out before carry oning the IFR research.

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