Relevance and Usefulness of Corporate Web Site Disclosure Practices

Relevance and Usefulness of Corporate Web Site Disclosure Practices

Ram S. Sriram (Georgia State University, USA) and Indrarini Laksmana (Kent State University, USA)
Copyright: © 2008 |Pages: 18
DOI: 10.4018/978-1-59904-570-2.ch018
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We investigate whether corporations are following the “best disclosure practices” when presenting business reports on their Web sites. As a benchmark, we use the recommendations made by the Jenkins Committee (1994) to evaluate disclosures on corporate Web sites for value, relevance, and quality of information. We compute a disclosure score using 26 items recommended by the Jenkins Committee and Meek, Roberts, and Gray (1995) as indicators of best reporting practices. Our findings reveal that most corporations do not follow “best disclosure practices” when reporting information on their Web sites. Only about half of the 26 disclosure items recommended by the Jenkins Committee are reported, and less than 50% of the sample firms in our study make such disclosure. Some of the items that the Jenkins Committee recommends as essential for improving quality and relevance of reporting, such as forward-looking information (e.g., plans, opportunities and risks, forecasts, critical success factors), nonfinancial items (e.g., changes in operating performance, research and development activities), or offbalance-sheet financing, are least often reported. The findings suggest that corporations must improve their Web site disclosures for investors to find them valuable, relevant, and useful.

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