It can be explained that fully declared and pertinent information plays a vital role in the in presenting the transparency and responsibility of the management in undertaking the business. The organizations conventionally make use of a paper-based reporting mechanism in order to share the information to the stakeholders and generally publish their financial scenario with the help of the financial statements for the distinct period of time.
The internet financial reporting can be explained as the utilisation of the website of the firm in order to disseminate the corporate financial and the information related to the performance (Basuony, & Mohamed 2014). This innovative approach can be explained as the facilitator for the process of extra equity by collecting efforts of the firms and could be exploited as a new mechanism which can raise the information sharing process and brings in a larger number of investors.
Due to the vibrant nature of the business world, the conventional paper reliant corporate reporting has become less timely and least helpful for the decision makers. The electronic based process of reporting eliminates the limitations of the paper reliant reports. The organizations can reap the benefits from the aspect of cost saving and enhance their data in more depth and breadth. The websites are helpful for the stakeholders in order to gain the financial information effectively and even provides opportunities for the presentation of the information (Sanad, & Al-Sartawi 2016). The problems that are associated with the website as a medium of communication is inclusive of usability, understandability of the data. These components associate to the characteristics of the information along with the technical components of the medium of presentation. It is the responsibility of the firm to make sure that the financial data is secured when it is presented through these channels. The financial factors and the corporate governance has a key role to play in the construction of the internet financial reporting and understanding these factors can enhance the level of internet financial reporting (Amin, & Mohamed 2016). This paper has therefore tried to figure out the internet financial reporting of Westpac and how the corporate governance and the financial factors have an impact on them. The paper would therefore try to highlight the process that has been used to gather the data and the suggestions given by other researchers with respect to the impact of the financial factors and corporate governance of internet financial reporting.
Research Aim
The aim of the research is the aspect with respect to which the research questions requires to be framed. The aim of the research comprises of the goals and the targets that has to be achieved in order to find relevant answers to the research topic and aid in the conclusion of the issue that has been highlighted. The aim of the paper therefore has been listed as follows:
Research Question
This paper has looked to recognise and identify the determinants of internet financial reporting by understanding the relationship among the impacts of the financial factors of internet financial reporting on the one side and undertaking a comparison with the impact of corporate governance on the internet financial reporting. The research question has been given as follows:
Q1. To what level does the financial factors and corporate governance factors have an impact on the Internet Financial Reporting?
Conceptual Framework
The conceptual framework is the tool for analytics with numerous contexts and variations. It is used make the conceptual variations and the management of the ideas. The strong conceptual model looks to capture something that is real and this should be done with the help of easy steps so that it becomes easier to apply and remember. The conceptual framework highlights the variables that are related to the research topic so that the issues related to the topic can be assessed and effective answers can be developed. The conceptual framework is given as follows:
Table 1: Conceptual Framework
(Source: As Created By the Author)
Introduction
The review of literature consists of the predictions and the suggestions that has been provided by other researchers with respect to researches that are similar to the topic. There has been an observation that internet financial reporting plays a key role in the development of the functional activities of an organization. Therefore, the factors that have an impact on the internet financial reporting has to be assessed in order to have an idea about the effectiveness of the existing internet financial reporting.
Leverage
The capital structure of an organization ascertains the leverage position. As the organizations are more dependent on the debt that is present in their capital framework, this would create increased leverage and wider responsibilities in order to meet the needs of their long term creditors for precise information (Aljawder, & Sarea 2016). The organizations having higher level of leverage can be assumed to reveal more data in order to decrease the agency costs by assuring the shareholders that their interests are secured.
Firm Size
The company size has been debated to have a positive relationship with internet financial reporting. Yassin (2017) who have undertaken studies on internet financial reporting has selected the firm size as one of the key aspects in order to explain the practices related to internet financial reporting. The agency theory recommends that the larger companies reveal increased agency costs due to the asymmetry of information among the participants of the market. In order to lower the agency costs, the bigger organizations reveal a larger flow of the corporate data.
Profitability
The disclosure of the company looks to raise the value of the company and reduce the level of risk of being undervalued in the market. The firms with enhanced profitability may declare greater information in order to address their opportunities and strengths. The investors theoretically are regraded to perceive the lack of disclosures that are voluntary in nature as a sign of the poor news of the firm. This discloses the better or aggregate performance of the company with poor choice incentive to declare. Mohamed, & Basuony (2014) have discovered that the relationship among internet reporting and profitability of the organization is very much assisted by the Australian organizations. This outcome is not in line with the one discovered by Khan (2015). Conversely, past empirical association among the performance of the companies and the disclosure of the financial information processes have been blended. Therefore, the firms with enhanced level of profitability are likely to incorporate internet financial reporting from the companies that are less profitable.
Liquidity
There exists a positive relationship among the internet financial reporting and the liquidity ratio of the firms. Basuony, & Mohamed (2014) have cited that firms with increased liquidity ratio will reveal additional data in order to differentiate themselves from the firms that has less favourable liquidity. Botti et al., (2014) has discovered that liquidity ratio is one of the primary indicators for the internet financial reporting among the Australian firms and have discovered an optimistic relationship among the voluntary utilisation of internet financial reporting and liquidity ratio. Conversely, the agency theory recommends that firms with lower liquidity ratio may give out information in order to satisfy the information in order to satisfy the information demands of the creditors and the shareholders. Khan et al., (2017) discovered that firms with lower liquidity give out additional information in their annual report. For the intention of the paper, more liquid companies are more likely to reveal more information on their websites than the firms that are less liquid.
Ownership
The firms with widely held ownership are likely to incorporate the internet financial reporting than the firms with closely handed ownership. Abdullah et al., (2017) discovered that the level of financial reporting on the internet rises with the ownership dispersion assisting the agency theory hypothesis. By looking at the perspective of the dispersion, increasingly focused shareholders motivates the practices of the voluntary disclosures. An increased number of substantial stakeholders reveal that a more focused company ownership and addresses an effective level of corporate governance technique. This has been due to pressure created from the extensive shareholders on the companies and thereby decreasing the supervising costs of the shareholders and lessening the hazard issues.
Age
The literature explains that age of listing of the firm impacts positively the level of internet financial reporting. The history of operations of the firm has been found to have an impact on the extent of declaration of the information in the brochures. According to Pillai, & Al-Malkawi (2017), a younger firm may undergo an increased level of competitive disadvantage if it declares various items like the data related to the research, expenses associated with development and the capital expenses. Therefore, older firms are more likely to have effective reporting systems which indicates that full declaration is inexpensive for them.
Type of Auditor
The firms that have been audited by the domestic audit companies with international affiliation are more likely to implement internet financial reporting than the firm that have been audited by the local firms who do not have any international affiliation. Almilia (2015) has recommended that the quality of the audit is a key factor in developing the overall reporting mechanism of a firm. Certain studies have provided evidence that a positive relationship among the kind of auditor and the level of declaration.
Summary
The literature therefore explains that these variables are the key financial and corporate governance factors with the help of which internet financial reporting can be enhanced. Each of the variables have their own traits and therefore has a key role to play during the development of the internet financial reporting.
In order to have an idea about the correlation among the impact of financial factors on internet financial reporting and the impact on corporate governance on internet financial reporting, the annual report and various other resources with respect to the internet financial reporting of Westpac. The paper would gather information from the secondary sources like the annual report of Westpac where the financial summary of the last five years of the firm have been taken into consideration (Miniaoui, & Oyelere 2013). The corporate governance mechanism of Westpac have even been considered so that extensive idea about the impact of internet financial reporting can be undertaken in an effective manner.
The research approach that would be used in this paper would a deductive approach as assessment of the data that have been gathered from various internet sources will be exploited. The paper would make use of the explanatory research design as this method would explain the financial factors and the corporate governance factors that can enhance the activities of internet financial reporting (Keliwon et al., 2014). The researcher would look into the company website of Westpac and thereby assess the factors associated with the internet financial reporting. The secondary data that has been gathered for the paper would be used for the purpose completing the research. The paper would even make use of the quantitative research method.
Reference List
Abdullah, M. D. F., Ardiansah, M. N., & Hamidah, N. (2017). The Effect of Company Size, Company Age, Public Ownership and Audit Quality on Internet Financial Reporting. SRIWIJAYA INTERNATIONAL JOURNAL OF DYNAMIC ECONOMICS AND BUSINESS, 1(2), 153-166.
Aljawder, N. A., & Sarea, A. M. (2016). Determinations of Internet Financial Reporting: Evidence form Bahrain Bourse. Jordan Journal of Business Administration, 12(4).
Almilia, L. S. (2015). Comparing internet financial reporting practices: Indonesia, Malaysia, Singapore, Japan and Australia. International Journal of Business Information Systems, 20(4), 477-495.
Amin, H. M., & Mohamed, E. K. (2016). Auditors’ perceptions of the impact of continuous auditing on the quality of Internet reported financial information in Egypt. Managerial Auditing Journal, 31(1), 111-132.
Basuony, M. A., & Mohamed, E. K. (2014). Determinants of internet financial disclosure in GCC countries. Asian Journal of Finance & Accounting, 6(1), 70.
Basuony, M., & Mohamed, E. (2014). Board composition, Ownership Concentration, and Voluntary Internet Disclosure by MSM-Listed Companies. Corporate Board: Roles, Duties and Composition, 10(1), 60-70.
Botti, L., Boubaker, S., Hamrouni, A., & Solonandrasana, B. (2014). Corporate governance efficiency and internet financial reporting quality. Review of Accounting and Finance, 13(1), 43-64.
Keliwon, K. B., Abdul Shukor, Z., Muhammadun Mohamed, Z., & Hassan, M. S. (2014). Exploring internet financial reporting (IFR) strategies of firms in Malaysia. Malaysian Accounting Review, 13(2), 1-21.
Khan, M. N. A. A. (2015). Internet financial reporting in Malaysia: Preparers’ and users’ perceptions. Procedia-Social and Behavioral Sciences, 172, 778-785.
Khan, M. N. A. A., Ismail, N. A., Mardani, A., Zavadskas, E. K., & Kaklauskas, A. (2017). EMPIRICAL RESEARCH OF USERS’OPINIONS ON SELECTED ASPECTS IN INTERNET FINANCIAL REPORTING. E+ M Ekonomie a Management, 20(2), 146.
Miniaoui, H., & Oyelere, P. (2013). Determinants of internet financial reporting practices: Evidence from the UAE. Review of Pacific Basin Financial Markets and Policies, 16(04), 1350026.
Mohamed, E. K., & Basuony, M. A. (2014). Determinants and characteristics of voluntary internet disclosures in GCC countries.
Pillai, R., & Al-Malkawi, H. A. N. (2017). On the relationship between corporate governance and firm performance: Evidence from GCC countries. Research in International Business and Finance.
Sanad, Z. R., & Al-Sartawi, A. M. M. (2016). Investigating the Relationship between Corporate Governance and Internet Financial Reporting (IFR): Evidence from Bahrain Bourse= ??????? ??? ???????? ???????? ? ??????? ?????? ??? ????????: ???? ?? ????? ???????. Jordan Journal of Business Administration, 12(1), 239-269.
Yassin, M. M. (2017). The determinants of internet financial reporting in Jordan: financial versus corporate governance. International Journal of Business Information Systems, 25(4), 526-556.
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