Determinants of internet financial reporting in Kenya
Matundura, Calvin Lucas
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To evaluate a potential investment, investors require detailed financial and other types of information about the companies. Evidence has shown that most institutional investors usually or occasionally review corporate Web sites before meeting a company's management. Corporate Web sites therefore provide a means for companies to provide such information. Some of the companies listed on the NSE provide such information while other do not. This leads to the question of what determines the choice to publish financial information on the internet. This study sought to establish the determinants of corporate internet financial reporting in Kenya with a specific reference to the firms listed on the Nairobi Stock Exchange. This study adopted a descriptive survey design. The population of this study was all the 58 firms listed and trading on the NSE as at 1st October 2011. Secondary data were used in the study by searching for websites using Google and Yahoo search engines and looking for financial information published on the websites. Financial information on profitability, assets, type of auditor, industry and whether the company was cross-listed were also sought from the company websites, the CMA, and the NSE. A multiple regression model was used to establish the determinants of internet financial reporting. The data was organized and entered into the SPSS and analysed using descriptive and multivariate analysis. The study found that 79.3% of the firms had websites and of these, 78.3% published financial information on their websites. Since the data did not meet all the conditions for a Pearson regression, the rank regression was employed. Rank regression analysis showed that total assets had a positive and significant effect on IFR (B = 0.011, p = 0.036). The study concludes therefore that the major determinant of internet financial reporting in Kenya size of the company as measured by the total assets. The study recommends the need for the regulators to issue guidelines and strictly stipulate the need for all listed companies to have websites and to publish their financial information online. Future research might test empirically how internet disclosure impacts upon companies‟ stock prices or dividends, to examine how this reporting provides value-relevant information for investors.