Determinants of Voluntary Internet Financial Reporting Disclosure: The case of joint-stock companies in the GCC Countries
Abstract
This study contributes to the existing knowledge of global financial transparency. It ventures to examine the market for the Gulf Cooperation Council (GCC) the determinants and effects of internet financial reporting disclosure (IFRD). It also addresses the partnership between IFRD and institutional governance. It employed quantitative research design. Data were generated from (38) banks of (49) except (11) banks of banks without specifics are the sample for this study. The banks include (9) Saudi Banks, (9) Kuwait Banks, (14) United Arab Emirates Banks, and (6) Bahrain Banks. The results show that IFRD is influenced by the corporate size, leverage, profitability, and governance mechanisms. According to the results, the study provides some recommendations for various parts of the capital market. First, for both companies and information users. They should raise their attention to IFRD. Second, for professional organizations, they should critically study the content of internet financial reporting, and issue a new standard to organize the accounting aspects of this disclosure and limit the risk related to it. The study raises awareness of the importance of corporate governance and private involvement of financing and acquisition decisions for borrowers and lenders.
Extended Abstract
Purpose – The present study ventures to examine the market for the Gulf Cooperation Council (GCC) the determinants and effects of internet financial reporting disclosure (IFRD). It also addresses the partnership between IFRD and institutional governance.
Design/methodology/approach – The research is positivist and quantitative, concentrating on a cross-sectional and time series analysis of 38 banks between 2011 and 2018. Several models are used to research the effect of the chosen market characteristics (organizational size, profitability, efficiency and audit types) and corporate management processes (independent board, the configuration of committees, board meetings, and CEOs) on the IFRD. The model is based on stakeholder organisation, authority, resources and ideas.
Findings – The results show that IFRD is influenced by corporate size, leverage, profitability, and governance mechanisms. According to the results, the study provides some recommendations for various parts of the capital market. First, for both companies and information users. They should raise their attention to IFRD. Second, for professional organizations, they should critically study the content of internet financial reporting, and issue a new standard to organize the accounting aspects of this disclosure and limit the risk related to it.
Research limitations/implications – The main disadvantages of this study relate to the attributes selected by the Board and do not include the audit committee's qualities. However, the author believes that these drawbacks do not affect the results. Overcoming these limits should generalize the tests.
Practical implications – The findings of this report provide a direct effect on policy making, developers, borrowers and creditors. The findings demonstrate the value of regulations, including transparency criteria, in the GCC countries and regions. The establishment of standards for accountability may reduce inequalities in the degree of bank disclosure. Banks may use these findings to strengthen their external tests. The study raises awareness of the importance of corporate governance and private involvement of financing and acquisition decisions for borrowers and lenders.
Originality/value – This research adds to banks 'sparse IFRD literature, especially in an environment in which capital markets lack active institutional investors, regulators are the primary information centre, and banks are the main source of external financing for businesses.
