Firms and governance factors affecting the adoption of web-based corporate reporting: Evidence from the USA

Abstract

This paper examines the potential determinants associated with a firm’s decision to use a corporate website. The probability of web-based corporate reporting adoption was measured by using a dichotomous variable, where one is given if the firm has a website and zero otherwise. Based on a sample of 1217 US listed firms, it was found that 950 firms have a website and 267 do not. Those firms with a website are larger, more profitable and have a larger board size with more female directors when compared with firms without websites. In addition, the results of the regression analysis revealed that firm size, profitability, leverage, board size and the percentage of female directors in the boardroom have a significant positive impact on the probability of a firm having a website. However, firm age has a significant negative impact on the probability of web-based corporate reporting adoption. A weakness in the previous literature has been the neglect of firms without an online presence, which implies a potential selection bias. Consequently, this research contributes to the international accounting literature by expanding our understanding in relation to the probability of firms adopting web-based corporate reporting and the economic consequences of them doing so through reducing asymmetric information, which acts as an incentive to encourage investment.

Determinants of corporate governance disclosure: evidence from an emerging market

“…First, concerning board size, the analysis indicates that the coefficient estimate bdsize is positive and statistically significant for all firms and non-financial firms at the 1% level but insignificant for financial firms. This empirical finding supports H1 and is in line with the empirical findings of Alnabsha et al (2018) in Libya, Cunha and Rodrigues (2018) in Portugal, Shehadeh and Alitani (2021) in the USA and contradicting the results of Elfeky (2017) in Egypt. This is also consistent with the theoretical predictions of resource dependence and stakeholder theories and contradicts agency theory.…”

“…This indicates that frequent board meetings in the financial sector do not alleviate information asymmetry. Third, concerning board composition, the analysis indicates that the coefficient of nedbcom has an insignificant positive association with CGD for all firms, including both financial and non-financial firms, consistent with the findings of Elgattani and Hussainey (2020) and Shehadeh and Alitani (2021). This lack of significance does not support H3.…”

“…Previous studies by Zeghal and Moussa (2015) in 250 largest firms worldwide listed in Global Fortune 500, Alnabsha et al (2018) in Libya; Cunha and Rodrigues (2018) in Portugal; and Shehadeh and Alitani (2021) in the USA, showed a significant positive relationship between board size and level of disclosure. However, studies by Alagla (2019) in the UK,…”

“…Studies that reported a significant positive link between board composition and CGD are Samaha et al (2012), Barros et al (2013), Zeghal and Moussa (2015), Elfeky (2017), Alnabsha et al (2018), Cunha and Rodrigues (2018), Ezat (2020), Khan and Ahmad (2021). Studies with no relationship between these two variables are Aboagye-Otchere et al (2012) in Ghana; Alves et al (2012) in Portugal and Spain; Lan et al (2013) in China; Zaheer (2013) in Pakistan; Allegrini and Greco (2013), Hieu and Lan (2015) in Vietnam; Alagla (2019), Elgattani and Hussainey (2020), Shehadeh and Alitani (2021). Other studies have reported a significant negative relationship, such as Al-Moataz and Hussainey (2013) in Saudi Arabia, and Suwaidan et al (2021).…”

“…According to Abad et al (2017), a larger board of directors can minimise the degree of information asymmetry. Additionally, when there are more directors on the board, the power of the directors to control and advocate for activities tends to be stronger, and the board's combined expertise and experience grow, necessitating a greater need for information sharing (Shehadeh and Alitani, 2021). Conversely, Jensen (1993) contends that larger boards are linked to weak communication and oversight, which negatively affects corporations' disclosure practices.…”