Jordan Journal of Business Administration,Volume 12, No. 1, 2016
Investigating the Relationship between Corporate Governance and Internet Financial Reporting (IFR): Evidence from Bahrain Bourse Zakeya Redha Sanad1 and Abdalmuttaleb M.A. Musleh Al-Sartawi2
ABSTRACT Due to globalization and advanced technology, corporate Governance and internet financial reporting (IFR) are becoming increasingly important topics as more companies are expanding globally and the economies are becoming closely interrelated. Kingdom of Bahrain as part of the developing countries had paid a lot of attention to corporate governance recently. Therefore, this study investigates the relationship between corporate governance and internet financial reporting. Extensive literature review was carried out and a multi-regression analysis was used in order to investigate the relationship between corporate governance and internet financial reporting for the companies that are listed in Bahrain bourse. The findings indicate that the relationship between corporate governance and internet financial reporting is weak due to the fact that the board characteristics do not affect the level of disclosing information via the internet (IFR). However, the board size and big4 companies have a positive relationship with IFR. The study recommends that regulatory bodies should develop a guideline of disclosing information through the internet in order to enhance the corporate transparency level among Bahrain listed companies. Keywords: Internet financial reporting; Corporate Governance; Voluntary Disclosure.
scandals and to be more precise, after the financial crisis
INTRODUCTION
in 2008, firms started to pay more attention to improve Due to globalization, the world is becoming more as
their corporate governance structure (Mousa&Desoky,
a small village. News, technology, cultures, businesses
2012).
and economies over the world can be shared easily
Therefore, people started to demand for acquiring
because they are interrelated and interdependent. Many
timely and transparent information. The rise of the internet
investors prefer investing abroad because it might have
had helped investors to acquire financial information about
better opportunities, and certainly, technology is making
the current and potential investment chances. According to
the borders between all the countries disappear.
Abdelsalam and Street (2007), internet is a vital tool in
However, an unexpected financial scandal in one
order to promote an appropriate operations of the financial
country may affect the others. After the global financial
markets by improving companies’ capability to offer the investors with updated information. Furthermore, Khan
1
Lecturer; Department of Accounting and Economics; College of Business and Finance; Ahlia University; Kingdom of Bahrain, PO.BOX 10878; Email:
[email protected]. 2 Assistant Professor ; Department of Accounting and Economics; College of Business and Finance; Ahlia University; Kingdom of Bahrain, PO.BOX 10878; Email:
[email protected]. Received on 20/5/2015 and Accepted for Publication on 3/11/2015.
and Ismail (2011) mentioned that the most crucial characteristic of the internet is that information can be accessed from everywhere and at any time. In addition, Hodge et al. (2004) noted that any technology that promotes a substitute presentation formats for the financial information might support the investors in collecting the
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© 2016 DAR Publishers/University of Jordan. All Rights Reserved.
Investigating the Relationship…
Zakeya Redha Sanad and Abdalmuttaleb M. A. Musleh Al-Sartawi
information required, improving the information disclosure
countries. For that reason, countries have improved their
transparency, and affect the investor decision process.
corporate governance practices (Al-shammari& Al-
Moreover, as stated by Lymer et al. (1999), public
Sultan, 2010). Bahrain, as part of the developing capital
reporting of financial and operating information by a
market, has paid a lot of attention to improving its
firm using the related internet based communications
corporate governance policies recently. According to the
medium or World Wide Web is called internet financial
country’s official site, its geographical location is
reporting (IFR). Besides, Lizzcharly et al. (2013) added
considered as the heart of the Gulf. Therefore, it helps in
that IFR is a disclosure of some of the financial
making quick and efficient access to every market in the
statements reporting through the use of technology such
region. Bahrain is always aiming at attracting domestic
as web tools analysis and multimedia. Moreover,
and foreign investors using different ways, like having
according to Basuonyand Ehab (2014), large size
no personal or corporate income tax. Additionally,
companies favor to disclose high level of information to
Bahrain offers 100% foreign ownership of real estate in
lower the information asymmetry and decrease the
almost all sectors and business assets.
agency costs. Also, they added that large companies
Additionally, in order for Bahrain to attract more
prefer to disclose information using the internet in order
investors locally and internationally, it started applying
to gain from the lower costs that result from these
the corporate governance code to make sure that all
companies having the required resources to do.
firms are aligned with the suitable mechanisms that are
Moreover, Juhmani (2013) stated that disclosure plays
related to corporate governance. According to Bushee et
an
by
al. (2014), institutional investors have several incentives
disseminating reliable and transparent information to
that would encourage them to invest in firms that use
shareholders and stakeholders. In addition, IFR can be
better corporate governance mechanisms. Furthermore,
considered as a voluntary disclosure tool because it is
many studies had examined corporate governance in
disclosed via the internet. Similarly, according to
Kingdom of Bahrain such as the studies that were
Oyelere
&Kuruppu (2012), the internet can be
conducted by Hussain and Mallin (2002), Mousa and
considered as a channel for voluntary communication of
Desoky (2012), Ramadhan (2012), Hamdan et al.
financial information. Also, Xiao et al., (2004) revealed
(2013),Al-Sartawi(2015)and Al-Sartawi&Sanad (2015)
that internet financial reporting is voluntary and greatly
in
unregulated.
(2002)
governance between all interested parties who invested
mentioned IFR is an embodiment of corporate total
or are planning to invest in kingdom of Bahrain.
disclosure that is aimed at lowering information
Nonetheless, few studies have studied the factors that
asymmetry between shareholders and managers of any
determine IFR and its practices in Gulf Cooperation
firm. Thus, IFR can help in reducing the agency problem
Council (GCC) countries and Bahrain such as the studies
(Ojah, 2012). Consequently, IFR would contribute in
by Joshi and Al Bastaki (2000) and Ehab (2010).
effective
role
in
Moreover,
corporate
Debreceny
governance,
et
al.
enhancing corporate governance of the firms.
order
toincrease
the awareness of
corporate
However, based on prior studies, there are limited
Research problem and research questions
studies that had linked the internet financial reporting
Corporate governance failures had a lot of damages
with corporate governance in The Kingdom of Bahrain.
on the capital markets of the developed and developing
Accordingly, this study will investigate the relationship
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Jordan Journal of Business Administration, Volume 12, No. 1, 2016
between corporate governance and internet financial
are listed in Bahrain Bourse that use internet financial
reporting of Bahrain listed companies. Thus, the
reporting and if the information presented in their
research questions are as follows:
websites are reliable and linked to the corporate
1.
governance code in Bahrain.
What is the level of internet financial reporting in
This
Bahrain listed companies? 2. 3.
research
focused
on
the
elements
and
What is the level of corporate governance in
information that are available in the companies’ websites
Bahrain listed companies?
and based on that all companies will benefit from this corporate
report because they can recognize the defaults that their
governance and internet financial reporting in
websites have and try to improve it. Besides, previous
Bahrain listed companies?
studies focused on the factors that are related to IFR
Is
there
a
relationship
between
Significance and Contribution
such as studies by Almilia (2009) and Basuony&
This study contributes to the existing studies in many
Mohamed (2014). Nevertheless, only few studies
ways. We are not aware of any previous studies that
focused
investigate
corporate
mechanisms as the determinants of internet based
governance and internet financial reporting in Kingdom
disclosure like the Kelton et al. (2008) that tested the
of Bahrain. Moreover, many different studies had tested
impact of corporate governance on internet financial
the association between corporate governance and
reporting.
the
relationship
between
on
investigating
corporate
governance
disclosure in traditional financial reporting such as Li &
Finally, based on previous studies, the different
Qi (2008). However, this research will test the new
levels of transparency of the online financial disclosures
trend in financial reporting using the internet instead of
can affect the decision making process by the investors
the traditional financial reporting. In addition, internet
(Hodge et al., 2004).As a result, investors will be more
financial reporting as mentioned in previous studies is
confident about the information presented in the
voluntary and greatly unregulated (Xiao et al., 2004).
companies’ websites and then they can make their
Also, it is important to investigate the relationship
investment decision more easily with consuming less
between corporate governance and internet financial
time than before. Furthermore, all listed companies who
reporting because the content in the IFR is prepared on a
did not update their websites would improve and update
timely basis and it is expected to be different than the
their websites in order to attract more investors.
content of the traditional annual report that is prepared on a yearly basis. Therefore, the study is very important
Research objectives
and it would add more insights about this relationship in
The main aim of this research is to address the following objectives:
the literature.
1.
Moreover, this study will provide an evidence for
To determine the level of internet financial reporting of Bahrain listed companies.
regulators to oversee the general practices of the current 2.
IFR in companies that are listed in Bahrain Bourse, in
To measure the level of corporate governance of Bahrain listed companies.
particular because Bahrain government had just recently 3.
started to apply its corporate governance code. Also, all
To
investigate
the
relationship
between
corporate governance and internet financial
stakeholders will benefit by recognizing companies that
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Investigating the Relationship…
Zakeya Redha Sanad and Abdalmuttaleb M. A. Musleh Al-Sartawi
defined
reporting of Bahrain listed companies.
corporate
governance
Firms started to focus more on the corporate
organizations that assign resource and power control
governance structure after the global financial scandals
among the participants. Nevertheless, Organization for
and to be more precise, after the financial crisis in 2008
Economic Cooperation and Development - OECD
(Mousa&Desoky,
Moreover,
(2004) had defined corporate governance as “a set of
Rabelo&Vansconcelos (2002), Ahunwan (2002), and
relationships between a company's management, its
Kiel & Nicholson (2003) all agreed that financial crisis
board, its shareholders and other stakeholders that
has raised concerns over the effectiveness of financial
provides the structure through which the objectives of
reporting, accounting standards, corporate governance
the company are set, and the means of attaining those
and accountability. In addition, Dharmadasa, et al.
objectives and monitoring performance are determined"
(2014) added that corporate governance issue arose in
(OECD 2004; 13).
the recent years as a result of financial scandals and
Consequently,
corporate
within
processes,
structures,
unethical business practices by firms all over the world.
institutions
the
Theoretical literature
2012).
and
as
governance
andaround
helps
in
reducing unethical business practices by increasing the
Several studies had examined how information
transparency of the disclosure. According to Juhmani
asymmetry and agency problems can be eliminated
(2013), when there is no transparent disclosure about a
through increasing the transparency of disclosure. Yue-
company's performance to its owners, this would lead to
Duan, et al, (2007) considered that in order to defend the
corporate governance. Both Ajinkya et al. (2005) and
investors' rights and improve data transparency, the
Juhmani (2013) agreed that corporate governance would
information intermediaries and regulatory bodies have
impact the transparency of the disclosure to the
employed huge efforts to promote corporate governance
stakeholders.
and also to eliminate the agency problem. Similarly,
Furthermore, a number of studies mentioned that
Mousa&Desoky (2012) mentioned that companies
corporate governance could have an effect on the firms’
disclose information related to corporate governance in
performance. Since that the board is considered one of
order to eliminate monitoring costs and information
the most significant corporate governance tools in order
asymmetry.
the
to monitor the managers’ actions (Fama, 1980).
confidence of the investors in the reported financial
According to Al-Matari, et al. (2012), corporate
information. Similarly, Basuony& Mohamed (2014)
governance mechanisms that might have an effect on
argued that large size firms tend to disclose more
firm
information
information
independence, CEO duality, board size, audit committee
asymmetry and agency costs. Also, their study showed
size, and audit committee activities. In addition, different
that large size companies prefer to disclose data using
studies have shown that good corporate governance
the internet because they can take an advantage of
practices directly effect on corporate performance
lowering the cost that results from companies having the
measured by the economic value added (Nur’ainy, et al.
resources to do so.
2013). On the other hand, Dharmadasa, et al. (2014) had
Therefore,
causing
a
this
would
reduction
improve
in
performance
include
audit
committee
Corporate governance still does not have a universal
measured the firms’ performance based on the boards’
definition (Manolescu, et al. 2011). Davis (2005) had
characteristics and the results of their study revealed that
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Jordan Journal of Business Administration, Volume 12, No. 1, 2016
firm
voluntary disclosure in line with a higher level of
positive
corporate governance application and awareness. In
relationship between board independence and firm
addition, Botosan (1997) found that annual reports that
performance.
are published by companies are considered as very
larger
boards
performance.
had
a
negative
Furthermore,
impact
there
is
on
a
important sources of information to outsiders.
Besides, there are several prior studies that explain governance
Due to advanced technology, a new way of
mechanisms in companies. As stated by Tai (2015),
communicating with the investors and shareholders is
corporate governance helps the firm to use the resources
created which is the internet. Kelton et al, (2008) noted
efficiently and it would reflect on a fair return for the
that the internet is a distinctive disclosure tool that
investors. He further added that high level of corporate
promotes different forms of presentations and allows
governance
the
fast, wide, and cheap communication to the interested
performance and the efficiency of the company by
investors (Kelton et al, 2008). People have started using
allocating the firms' resources and by having a better
the internet for business purposes since the early 90’s
management in the firm. Moreover, Madhani (2007)
and companies started to realize its importance in
mentioned that high level of corporate governance is the
disseminating the financial information in the mid 90’s.
essential key in order to have a continuous growth and a
(Petravick and Gillett 1996, Booker et al., 1997 and
sustainable competitive advantage.
Koreto, 1997). According to Khan and Ismail (2012),
the
benefits
of
improving
would
corporate
contribute
in
enhancing
internet has become one of the most popular sources of
Additionally, a number of studies were conducted to examine the impact of family firms and concentrated
getting
ownership
as,
financial reporting is becoming less effective compared
Dharmadasa et al (2014) study that revealed family
to the usage of internet financial reporting. Almilia
directors was not significant in increasing the firm
(2009) stated that electronic-based reporting remove the
performance.
restrictions of paper based reports. As a result,
on
corporate
governance.
Such
the
information.
Consequently,
traditional
Many studies argued the relationship between
traditional paper-based corporate reporting has become
corporate governance and the transparency of the
less effective for decision makers. According to Purba et
information disclosure. According to Alhazaimeh et al,
al. (2013), companies that use the internet in order to
(2014) accounting disclosure is a very crucial source of
report their financial information to all interested parties
information to all shareholders and stakeholders as it
is called internet financial reporting (IFR). There are various definitions for IFR offered by
reduces ambiguity and helps them to make their appropriate
investment
and
financial
different researchers. According to Poon & Yu (2012),
decisions
IFR is the use of the firms’ web sites in order to
(Alhazaimeh et al, 2014). Furthermore,
solid
corporate
disseminate
governance
information
about
their
financial
mechanisms encourage managers to disclose further
performance. IFR can also be defined as the public
information and this is because it can improve the
reporting of financial and operating data by a business
monitoring of the managers’ disclosing strategies
enterprise by the related Internet-based communications
(Madhani, 2014). Another study by Alhazaimeh, et al,
medium (Lymer et al.,1999). Moreover, other authors
(2014) revealed that there is a substantial level of
explained IFR as the disclosure of the financial
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Investigating the Relationship…
Zakeya Redha Sanad and Abdalmuttaleb M. A. Musleh Al-Sartawi
statements reporting through the use of technology such
Williams and Pei (1999) mentioned that there are
as multimedia and Web tools analysis (Lizzcharly, et al.
many advantages of using internet reporting such as, the
2013). Additionally, other authors such as Ashbaugh, et
information is available to all users 24 hours a day; small
al. (1999) stated that IFR is seen as a means of effective
companies could have international contacts; the
communication
and
information can be translated into multiple languages in
shareholders. Also, Hunter and Smith (2010) stated that
few seconds; the ability to create one to one relationship
Internet Financial Reporting refers to the use of a
with
company’s web-sites in order to distribute information
communication;
about the companies’ financial performance.
dissemination; flexibility to move the site to another
to
investors,
customers,
interested
parties; lower
interactive cost
of
and
fast
information
location; and could have interactive graphic and audio.
Based on what was mentioned above, since different studies concluded that corporate governance can affect
Furthermore, Khan and Ismail (2012) mentioned that
the information disclosure and a number of studies
there are key benefits to the users who use the internet
mentioned that firms are using the internet in order to
for getting the financial information of companies which
disclose their financial information (Purba et al, 2013),
are: it provides information for company cheaply,
the researchers decided to investigate the relationship
facilitates the investment decision process, enhance
between corporate governance and internet financial
timeliness and improve efficiency in gathering the
reporting.
financial information. The study suggested that there are
A single study by Kelton et al, (2008) investigated
three factors that are considered important by the
the relationship between corporate governance structures
responding companies to engage in internet financial
and the disclosure transparency assessed by the
reporting such as, competitors in the industry, enhance
performance level of (IFR) Internet financial reporting.
corporate image and company teller with the technology
Corporate governance was measured by specific aspects
development. IFR can be faced by different challenges. According
such as ownership structure, shareholder rights, audit committee
characteristics
and
board
to Khan& Ismail (2012) and Basuony& Mohamed
composition.
Furthermore, the authors measured the disclosure index
(2014),
integrity
and
security
of
the
financial
transparency by the extent of each sample firm’s IFR by
information that are published on the company’s website
presentation layout, corporate governance disclosures
are one of the main challenges faced by firms using
and information content. They examined firm’s websites
internet to distribute their financial reports. Therefore, as
that are traded on the National Association of Securities
stated by Almilia (2009), companies should ensure the
Dealers Automated Quotations (NASDAQ) market. The
security of the financial information when it is presented
study concluded that corporate governance structures
through the internet.
impact the firm’s Internet disclosure performance,
In addition, different studies have determined the
furthermore in response to the information provided
factors that affect the internet financial reporting. For
asymmetry
the
instance, Almilia (2009) used firm size, profitability and
stakeholders. In addition, the analysis showed that the
leverage in order to uncover the factors that affect the
correlation between corporate governance and IFR
use of internet financial reporting. Also, Basuony and
differs with the firm’s size.
Mohamed (2014) added more factors that would affect
between
management
and
all
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Jordan Journal of Business Administration, Volume 12, No. 1, 2016
IFR in their study which are firm size, return on assets,
for
leverage,
performance, they can increase the board size and reduce
industry
and
auditor
type.
Corporate
GCC
countries
to
improve
their
financial
the block shareholding.
governance has become an crucial issue in the emerging economies (Millstein, 2003). The main aim for emerging
On the other hand, Basuony and Mohamed (2014)
economies to consider establishing corporate governance
mentioned that IFR is a fast growing phenomenon in the
is the need to build investors' confidence in order to
western countries. Almilia (2009) stated that there is
expand their economy and attract local and foreign
growing empirical studies on IFR since 1995. However,
investments (Abhayawansa& Johnson, 2007).
it is still not very much popular in the GCC countries. They also noted that there are few empirical studies that
Due to the openness of the economies of the GCC countries
with
the
global
economy,
the
investigated IFR in the Middle East.
inter-
connectedness of the foreign markets, the growing
The Kingdom of Bahrain is one of the most leading
presence of international firms in the region, increasing
economies in the region and it is one of the worlds’
number of western expatriates in senior management
leading finance centers (Baena, 2011). Despite the small
positions and the increasing integration of GCC
size of the Bahraini market (48 listed companies)
countries and adoption of international standards, the
compared to its surrounding neighbors, Bahrain bourse
GCC countries are being more concerned about
attracts many investments and can compete with them.
corporate governance issues and standards.
Moreover, it always tries to create a suitable
Based on a Hawkamah-IIF comparative survey that
environment to attract foreign investors in order to
was conducted in year 2006 about corporate governance
diversify and enhance its economy (Mousa&Desoky,
in GCC countries, Oman, Saudi Arabia and Kuwait are
2012). Bahrain Stock Exchange was established in 1987,
having better corporate governance frameworks than
and then, it was replaced by Bahrain Bourse as a
United Arab Emirates, Qatar and Bahrain. There are
shareholding company in 2010.
different factors that helped in delaying the development
Therefore, it has established its corporate governance
of corporate governance in the GCC countries. Some of
code in 2011 in order to make the corporate governance
the reasons are the dominance of family owned
systems more understandable and transparent and as a
companies and underdeveloped capital markets with
result, it would attract more international and local investors
weak regulatory environment. Moreover, another study
in Bahrain (Hussain and Mallin, 2003). Similarly, Mousa
about IFR was conducted in Oman in 2007 by Oyelere
and Desoky (2012) noted that the purpose of this code is to
and Mohamed indicated that IFR is still at an early stage
make sure that corporate governance system is transparent
in Oman and there are many opportunities and
and understandable for all stakeholders in Bahrain and
challenges for the stakeholder in corporate reporting. On
internationally. Nevertheless, Ramadhan (2012) noted that
the other hand, a study that was conducted in United
Bahrain corporate governance code is based on comply and
Arab Emirates - UAE by Miniaoui (2013) revealed that
explain principle which considers that each company is
the most significant predictors of IFR adoption in UAE
expected to comply with the code or justify its non-
listed companies are the leverage firm size, profitability
compliance. Nonetheless, a number of studies focused on aspects
and industry sector.
of governance such as ownership structure and board
In addition, Tai (2015) recommended that in order
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Investigating the Relationship…
Zakeya Redha Sanad and Abdalmuttaleb M. A. Musleh Al-Sartawi
composition in Kingdom of Bahrain. Hussain and Mallin
link between the two issues internationally. For example,
(2002) had examined the role of directors in corporate
Kelton et al (2008) had used companies that are listed in
governance in Bahrain using companies that are listed in
NASDAQ in order to test the impact of corporate
Bahrain Bourse as a sample of their study.
governance on Internet Financial Reporting.
On the other hand, Mousa and Desoky (2012) argued
Accordingly, this study would be an important
that ownership structure and board characteristics have a
contribution in filling the gap in the current literature by
substantial effect on corporate value and their study also
examining
recommended that policy makers should consider the
governance and internet financial reporting of companies
institutional environment and the characteristics of the firms
that are listed in Kingdom of Bahrain Bourse.
the
relationship
between
corporate
before they apply any corporate governance alterations. In addition, Ramadhan (2012) argued that one of the key
Hypothesis Development
obstacles for carrying out corporate governance is the
a.
absence of information and the lack of understanding the
Beasley (1996) noted that the number of independent
Corporate Governance Independent Variables
directors of the board of directors is positively associated
role of board members and external auditors. On the other hand, IFR phenomenon has little
with the board’s ability to influence the disclosure
empirical studies in Bahrain. Such as the studies that
decisions. In addition, according to Bushee et al. (2014),
were conducted by (Joshi and Al Bastaki, 2000, Basuony
the combination of the CEO and the chairperson
and Mohamed, 2014). Joshi and Al Bastaki (2000)
positions is considered as ineffective governance
provided a useful study on how banks in Bahrain
because it reduces the probability that the board will
voluntarily disclose their financial information via the
objectively monitor the managements' behavior. On the
internet. They also examined the relationship between
other hand, Thangatorai et al. (2011), Kelton& Yang
the extent of financial disclosure and the key factors
(2008) and Yap et al. (2011) studies revealed that the
influencing the disclosure by banks. Their study
separation of the chairman of the board and CEO does
concluded that 63% of the banks in Bahrain had their
not explain IFR.
websites on the internet and 82% of the banks had
Kelton& Yang (2008) had studied the impact of
presented their accounts on the website in detailed form.
Corporate Governance on internet financial reporting
In addition, banks with large sizes are more likely
using NASDAQ listed companies. The findings revealed
prepared to distribute their financial information using
that the mechanisms of corporate governance influence
the internet. Nevertheless, profitability and industry type
the firms’ disclosure transparency. In addition they also
are important factors that would affect their decision in
added that the association between corporate governance
disclosing their financial information using the internet.
and IFR varies with size. Also, they concluded that IFR
However, there are limited studies that joined
is more likely for firms that have weak shareholder
corporate governance and internet financial reporting in
rights, a higher percentage of independent directors, a
order to investigate their relationship together in
lower percentage of block-holder ownership, a higher
Kingdom of Bahrain. Nonetheless, limited studies have
percentage of audit committee members that are experts
joined corporate governance and internet financial
and a more diligent audit committee. Based on Hamdan
reporting and examined whether there is any possible
et al. (2013) study and Institutional Shareholder Services
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Jordan Journal of Business Administration, Volume 12, No. 1, 2016
the
the information on how to use the latest display in
researchers had adopted variables that measure the
distributing the companies’ corporate information and
boards characteristics and the level of the company’s’
website design. Furthermore, the presentation dimension
ownership.
the
assists in providing the information on the usage of the
independency of the board members, separation of the
most updated display criteria in distributing information
chairman and CEO and board size. Ownership level was
and the company web design.
Inc.
(ISS) research
Board
and
recommendations,
characteristics
included
measured by the boards’ ownership, the ownership of
The IFR index, in the Appendix, consisted of 89 items,
the top 3 stockholders in the company, in addition to the
including 71 items of content and 18 items of presentation
highest stockholder ownership.
format. The researchers had selected these items based on
b.
three previous studies’ checklists, Kelton& Yang (2008),
IFR Dependent Variables
Different researchers had used different indexes to
Almilia (2009), and Khan and Ismail (2011) because they
measure IFR. For example, Kleton& Yang (2008) used
used similar checklists that contain the most famous two
the content and the format in order to measure IFR. In
elements which are content and presentation. The
addition, Khan & Ismail (2011) had used the
researchers compared the researchers’ checklists and
presentation and the content for IFR index. On the other
added them together in order to have a wider list that
side, Almilia (2009) had developed an index in order to
covers approximately all the related items in regards to
measure the technology used in the IFR rather than the
content and presentation elements.
content of information statements. So they assigned the
c.
Control Variables:
following weights in order to measure IFR: content
Based on a number of studies that studied the factors
(40%), user support (20%), technology (20%) and
that affect the use of the IFR, the researchers decided to
timeliness (20%).
use the firm size, leverage, sector type and auditor type
The researchers had adopted an internet financial
as control variables for the current study. It appears that
reporting index (IFRI) for the current study using previous
different researchers such as (Joshi & Al-Bastaki 2000,
studies’ indexes. The IFR index included the content and
Almilia 2009, Dâmaso&Lourenço 2011 and Basuony&
the presentation dimensions because they are the most
Mohamed 2014) had agreed that the firm size is one of
famous and widely used by many researchers, such as,
the most key factors that would affect whether the
Kleton and Yang (2008), Almilia (2009), Khan and Ismail
company is likely using the internet for disseminating
(2011), and Aly, .et al (2010) in order to measure the
their financial information or not. In addition, different
quality of the companies’ websites. In addition, the
studies have determined the factors that affect the IFR.
presentation format can help in preparing a more reliable
For instance, Almilia (2009) used firm size, profitability
disclosure to the interested parties through easy access,
and leverage in order to determine the factors that affect
readability and comprehensible financial information that
the use of IFR.
would help in getting the required information quickly
On the other hand, Basuony& Mohamed (2014) had
supported by displays of user friendly website (FASB,
added more factors that would affect IFR in their study
2000). Moreover, as noted by Khan and Ismail (2010), the
which are firm size, return on assets, leverage, industry
index of IFR should contain the content and the
type and auditor type. Moreover, Kelton& Yang (2008)
presentation dimensions. The content dimension displays
had also added the auditor type as a control variable in
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Investigating the Relationship…
Zakeya Redha Sanad and Abdalmuttaleb M. A. Musleh Al-Sartawi
their study in order to measure the impact of corporate
H02: There is no relationship between board size
governance on IFR. Furthermore, Miniaoui (2013) noted
and internet financial reporting (IFR) of companies that
that larger companies with higher leverage are more
are listed in Bahrain Bourse.
probably to have a website and use it for IFR than
H03: There is no relationship between board
smaller low leveraged companies. She also added that it
independence and internet financial reporting (IFR) of
was observed that 62% of IFR firms are from investment
companies that are listed in Bahrain Bourse.
and finance sector, banking sector and insurance sector.
H04: There is no relationship between the directors’
Firm size was measured by the natural logarithm of the
ownership and internet financial reporting (IFR) of
firm’s total assets. In addition, leverage was measured by
companies that are listed in Bahrain Bourse.1
dividing the total liabilities over the total assets.
H05: There is no relationship between the ownership
Furthermore, the researchers measured the sector type by
of top 3 shareholders and internet financial reporting
dividing the listed companies into three categories:
(IFR) of companies that are listed in Bahrain Bourse. 2
Financial sector (1), services sector (2) and industrial sector
H06: There is no relationship between the ownership
(3). Additionally, Xiao et al. (2004) study revealed that the
of top and internet financial reporting (IFR) of
extent of internet corporate disclosure is higher when the
companies that are listed in Bahrain Bourse. 3
Chinese companies that are audited by Big-5 firms
Sample Selection
(Currently Big 4). Therefore, the researchers had measured
The empirical study of the current research depends
BIG4 variable using a dichotomous variable that equals one
on a sample which contains 48 listed companies in
if auditor is a one of the Big-4 firms, and zero otherwise.
Bahrain bourse for the year 2014. However, the required
Auditor type was measured by using a variable that equals
data were gathered from 38 listed companies. Some of
one if the auditor is from the big4 and zero otherwise. All
the companies were excluded from the study because
these information are gathered from Bahrain bourse website
their website was not working and some of them did not
and the listed companies’ websites. The researchers used
have an investor relations section on their websites. In
the most updated information that is prepared in December
addition, few companies were suspended from trading in
31, 2014.
the bourse - table (1) shows the sample selection –
d.
Hypothesis
Moreover, the researchers used the companies’ websites
Extant literature, as reviewed earlier provides a
and Bahrain Bourse website to gather the data required
foundation for the research hypotheses relating to IFR. It
for this study.
is proposed to set up research hypotheses and subhypothesis as follows: H0: There is no relationship between corporate governance and internet financial reporting (IFR) of companies that are listed in Bahrain Bourse. Sub-hypotheses
1
According to the Institutional Shareholder Services (ISS), the directors’ ownership should be between 1% and 20%. 2 According to the Institutional Shareholder Services (ISS), the ownership of top 3 stockholders should not be more than 50%. 3 According to the Institutional Shareholder Services (ISS), the ownership of top stockholder should not be more than 20%.
H01: There is no relationship between CEO Duality and internet financial reporting (IFR) of companies that are listed in Bahrain Bourse.
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Jordan Journal of Business Administration, Volume 12, No. 1, 2016
Table 1.Sample Selection Item
Number
Percentage
Listed companies in Bahrain Bourse
48
100%
Suspended from Bahrain Bourse
(5)
(10.4%)
Company's website was not working
(1)
(2.1%)
The company has no website
(1)
(2.1%)
No investors relations section in the company's' website
(1)
(2.1%)
Closed companies
(2)
(4.3%)
Total companies included in the sample
38
79%
The researchers had divided the listed companies into
Yang, 2008, Mousa & Desoky, 2012, Dharmadasa, et al,
three categories: Financial sector, services sector, and
2014 and Tai, 2015, Hamdan et al. , 2013). The ownership
industrial sector - table (2) shows the sample selection -
level will be measured based on the boards’ ownership, the
Furthermore, the study focused on two aspects which are
ownership of the top 3 stockholders, in addition to the
boards of directors’ characteristics and also the ownership
highest stockholder ownership in the company (Hamdan et
level. The boards' characteristics will be measured based on
al. , 2013).
CEO duality, board size and board independence (Kelton & Table 2.Distribution of Sample Among Sectors Sector
Financial
Services Industrial
Category
Companies per category
Banks
8
Investment
10
Insurance
5
Services
8
Hotels &Tourism
4
Industrial
3
Total Model Development The selection of variables is based on examination of
38
IFRIi 0 1DB _ DUALi 2 BD _ SIZEi 3 BD _ INDPi 4 BD _ ONTi 5 BD _ TTSONFi 6 BD _ TSONTi 7 L _ FSZi 8 ROAi 9 LVGi n3 k SECTi,k 11BIG4i i k 1 Where:
previous empirical studies. Moreover, multiple regression analysis is used to measure the relationship between corporate governance as an independent variable and Internet financial reporting which is the dependent variable as it is showed in the following equation:
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Investigating the Relationship…
Code
Zakeya Redha Sanad and Abdalmuttaleb M. A. Musleh Al-Sartawi
Variable Name
Operationalization
Dependent variable - Internet financial reporting index: IFRI
This is a binary variable wherein 0 indicates that the company not
Internet financial reporting index
use IFR and l otherwise
Independent Variables - Board Characteristics: This is a binary variable wherein 1 indicates that the chairperson DB_DUAL
CEO duality
BD_SIZE
Board size (7-13)
BD_INDP
Board independence
BD_ONT BD_TTSONF BD_TSONT
and CEO are different people and 0 otherwise A binary variable wherein 0 indicates that the size of the board less than 7 and l otherwise A binary variable wherein 0 indicates that there is no non-executive directors in the board and l otherwise.
Directors ownership is between
A binary variable wherein 0 indicates that directors did not owned
1% and 20%
between 1% - 20% and 1 otherwise.
The
ownership
of
top
3
A binary variable wherein 0 indicates that the top three stockholders
stockholders not more than 50%
owned more than 50% and l otherwise.
The ownership of top stockholder
A binary variable wherein 0 indicates that the top stockholder
not more than 20%
owned more than 20% and l otherwise.
Control Variables: L_FSZ
Firm size
Natural logarithm of Total Assets
ROA
Return on assets
Net income/Total Assets
LVG
Leverage
Total liabilities/ Total Assets
Financial sector Sector
Services sector Industrial sector:
BIG4
Auditor Type
εi
Error
This is a binary Wherein 1 means that the company is Commercial Banks; Investment and Insurance and 0 otherwise This is a binary Wherein 1 means that the company is Services, Hotels & Tourism and 0 otherwise This is a binary Wherein 1 means that the company is Industrial and 0 otherwise This is a binary if (Big 4) =1 , Otherwise=0
Validity of data
Some of the companies were excluded from the study
The empirical study of the current research depends
because of different reasons as mentioned in the
on a sample which contains 48 listed companies in
previous sections. Data on corporate governance and
Bahrain Bourse for the year 2014. Nevertheless, the
IFR variables were collected from the companies’
required data were gathered from 38 listed companies.
websites and also from Bahrain Bourse website. The
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Jordan Journal of Business Administration, Volume 12, No. 1, 2016
sample size of the study is quite limited and this is due to
Table 3. Normal Distribution Test: Jarque-Bera Test
the fact that the size of the Bahrain market is small
Variable
J-B
P-V
Skewness
Kurtosis
which contains only 48 companies. Therefore, the
ROA
10.268
0.005
1.168
4.010
researchers have to examine the validity of the data for
Firm Size
2.34
0.308
0.454
2.189
the statistical analysis in order to make sure that the
Leverage
2.83
0.241
0.211
1.729
model of this study is accurate. Four tests were applied in order to test the validity of the data. The tests were the
The second test was Multicollinearity test that tests
normal distribution test, Multicollinearity test, the
the strength of the general linear model that mainly
autocorrelation test, and the Hetroskedasticity test. The
depends on the hypothesis which states that all variables
validity test had shown that the study model that is
are independent from each other. However, if this
representing
condition was not realized, then the general linear model
the
correlation
between
corporate
governance and IFR is accurate and secured.
would be inapplicable. Variance inflation factor (VIF)
The IFR index, CEO duality, board size, board
was determined in order to make sure that the
independence, sector type, and auditor type variables are
independent variables are independent from each other.
dummy variables. Therefore, the normal distribution test
When getting a VIF that is greater than 10, it means that
was not applied to them. Furthermore, firm size, ROA
there is a Multicollinearity problem for the independent
and financial leverage variables were used in the normal
variable (Gujarati, 2003). According to table (4), it can
distribution test.
be noticed that (VIF) value for all independent variables
JarqueBera test was used in order to secure the
are less than 10 which indicates that there is no
approximation of data to normal distribution. According
Collinearity problem in the model of the study.
to Gujarati (2003), the researchers should accept the null hypothesis which refers to that the data follow normal
Table 4.Collinearity Statistics Test
distribution if the probability of (J-B) test was greater than 0.05. Thus, according to table (3), the researchers had noticed that the probability for firm size and financial leverage were greater than 0.05. In addition,
Model
the results of the test had shown that the Skewness was approximately zero and the Kurtosis was approximately
Tolerance
VIF
CEO duality
.909
1.100
Board size (7 to 13)
.484
2.066
Board independence
.650
1.538
Directors ownership is between
.270
3.701
.366
2.731
.181
5.532
Firm size
.316
3.164
ROA
.373
2.679
Leverage
.346
2.891
Big4
.398
2.510
1% and 20%
three. Therefore, this implies that they are normally
the ownership of top 3
distributed. However, ROA (J-B) probability was less
stockholders not more than 50%
than 0.05 and also the Skewness was not close to zero
the ownership of top stockholder
and the Kurtosis was not close to three. Thus, this
not more than 20%
indicates that it was far away from the normal distribution. As a result, the natural logarithm for this variable was used in order to overcome this problem.
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Investigating the Relationship…
Zakeya Redha Sanad and Abdalmuttaleb M. A. Musleh Al-Sartawi
Tolerance
VIF
Homoskedasticity or Heteroskedasticity. According to
Ser
.343
2.915
Awad (2000) the Mean must be equal to zero. When the
Ind
.554
1.804
Heteroskedasticity is present in the model, statistical
Fin
.514
1.947
methods will be used in order to solve this problem.
Model
Such as, using White test and using E-Views program In addition, the researchers had examined the study
after being elicited from the program themselves.
model using autocorrelation test in order to check
According to table (6), the researchers had found that p-
whether there is an autocorrelation problem. This
value of the model is less than 0.05 which means
problem occurs when the two neighboring scenes were
rejecting the null hypothesis. This means that the model
correlated and therefore, it would influence the
is having a Homoskedasticity.
credibility of the model used. Due to this correlation, Table 6.Homoskedasticity Test
the influence of the independent variables would be great. In order to check it, the researchers had used
Model
F (White)
P-Value (White)
Durbin Watson test. According to table (5), the (D-W)
1
3.034
0.0098
value of the model was beyond the d-statistic range which is less than the minimal range. This shows that
Descriptive Analysis
there is a positive autocorrelation. In order to overcome
The descriptive analysis is divided into two sections.
this problem, (Lag 1) has to be considered when testing
The first section describes generally the descriptive
the model of the study.
analysis of the variables. The second section examines the variables based on firms’ size, score of corporate governance and industry sectors using the path analysis.
Table 5.Autocorrelation Test
a.
Std. Model
R
R
Adjusted
Error of
Durbin-
The researchers had divided the variables into two
Square
R Square
the
Watson
categories, continuous variables and dummy variables. Table (7) represents the descriptive statistics for
Estimate 1
.914
General Descriptive Analysis
.835
.752
.08669
continuous variables. The mean of the total assets of the
1.900
sample size is 1465963, which shows that the mean size a.
Predictors: (Constant), Ind, ROA, Directors
of the study sample is large. This gives us an indicator
ownership is between 1% and 20%, CEO duality ,
that most of the companies are using IFR as revealed by
Board independence, Board size (7 to 13),
previous studies who mentioned that large companies
Leverage, the ownership of top 3 stockholders not
are more probable to disclose their annual reports on the
more than 50%, Big4, Firm size, Ser, fin, the
company’s Web sites (Ismail &Tayib, 2000). Furthermore, the mean of ROA hold on average .043,
ownership of top stockholder not more than 20% b.
with a range between -.035and .195. This shows that
Dependent Variable: Index
Finally, the researchers had used Homoskedasticity
companies are disclosing their information even if they
test in order to check whether the model is having a
are having a loss. In addition, the leverage of the sample
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Jordan Journal of Business Administration, Volume 12, No. 1, 2016
varies from .041 to .896 which indicates that there are
IFR index has an average of .712, with a range
many companies who have high leverage and most of
between .24 and .92. The mean indicates that listed
these companies are in the financial sector in Bahrain
companies are using an adequate level of internet
because they depend mostly on loans in financing their
financial reporting. This means that Bahrain is adopting
business. Also, this gives us an indicator that IFR level
new trends and technologies in order to allow substitute
would increase in order to provide all the obligators and
presentation formats for financial information that would
stakeholders with the current status of the company’s’
enhance the transparency of the disclosure and hence,
performance.
attract more investors internationally. Table 7.Descriptive Statistics for continuous variables Variable
N
Mini.
Max.
Mean
S.D
Total Assets
38
5949
12309764
1465963
3002932
ROA
38
-.035
.195
.043
.051
Leverage
38
.041
.896
.434
.281
IFR Index
38
.24
.92
.712
.172
Valid N (listwise)
38 independence would lead to enhanced transparency and
Moreover, Table (8) reports descriptive statistics for dummy variables. It shows that 92.1% of the sample was
responsibility
separating the CEO from the chairman of the board. This
disclosure. He further added that this implies a stronger
indicates that listed companies are concerned in
and
separating the CEO from the chairman of the board.
independent board members.
higher
by
means
controlling
of and
additional monitoring
voluntary role
of
Therefore, result is consistent with Bahrain code which
Moreover, 89.5% of the firms’ board size is between
recommends that the chairman of the board should be
7 and 13. Harris and Raviv (2008) found that larger
not the same person as the CEO and independent, so
board could be optimal size for the board. Moreover,
that promote an appropriate balance of power and a
Zaheer (2013) mentioned that larger board size has a
greater capacity of the board for more independent
positive relationship with the level of corporate
decision making.
governance disclosure. Therefore, the result shows that 89% the boards are between the optimal range and IFR
In addition, 94.7% of the firms are having
level would probably be high.
independent members in the board. This is a good indicator that companies are making sure in increasing
In addition, 57% of the directors’ ownership is
the boards’ independence and accordingly, increasing
between 1% and 20%. 55.3% of the top 3 stockholders’
the corporate governance in order to attract more
ownership was more than 50%. Additionally, 60.5% of
investors and to avoid any conflict of interests while
the firms’ stockholders’ ownership was more than 20%.
taking decisions. This is supported by Hussain (2009)
All these results show that the directors and major
study who mentioned that higher level of board
stockholders ownership are more than the average.
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Investigating the Relationship…
Zakeya Redha Sanad and Abdalmuttaleb M. A. Musleh Al-Sartawi
Finally, 81.6% of the firms are audited by Big4. The
are considered as small firms. Then, the researchers had
percentage reveals that most of the samples' companies
found the mean of the CEO duality and the other
are hiring big4 and this would probably indicate that the
variables for all the firms and compare them based on
level of the disclosures' transparency is high. Based on
their size. The results are showed in table (9).
Xiao et al.,(2004) which mentioned that there is a
Based on table (9), it was noticed that small firms are
positive association between audit firm size and
separating the CEO from the chairman of the board more
voluntary disclosure. In addition, the percentage would
than large firms. Small firms’ mean was (1.00), while
also indicates that the level of corporate governance in
the large firms’ mean was (.84), which is less than the
Bahrain Bourse listed companies might be high based on
small firms. The result was statistically significant at
Fan and Wong (2004) study which suggests that external
10% of confidence because the sig. was (.074) and the t.
auditors play a governance role. They justify their results
test value was (1.837) was greater than its critical value
by stating that firms tend to hire name-brand external
at 10% of confidence. Moreover, the board size of large firms was between
auditors when their ownership structures indicate agency conflicts.
7 and 13 members whereas small firms had it less than
b.
large firms. The mean for the large firms is (1.00),
Path analysis
b.1. Firms’ Size
whereas the mean for small firms is (.79). The result was
The study sample was divided into two categories
statistically significant at 5% of confidence because the
based on the firms’ size; large and small firms. Firms
sig. was (.035). Also, the t. test value (2.191) was greater
that have greater size than the median are considered
than its critical value at 5% of confidence.
large firms, and firms that have size less than the median Table 8.Descriptive Statistics for dummy variables Variables
Frequency of 1’s
Label
Frequency of 0’s
Frequency
Percent
Frequency
Percent
DB_DUAL
35
92.1
3
7.9
Board size (7 to 13)
BD_SIZE
34
89.5
4
10.5
Board independence
BD_INDP
36
94.7
2
5.3
Directors ownership is between 1% and 20%
BD_ONT
22
57.9
16
42.1
the ownership of top 3 stockholders not more than 50%
BD_TTSONF
16
42.1
21
55.3
the ownership of top stockholder not more than 20%
BD_TSONT
14
36.8
23
60.5
BIG4
31
81.6
7
18.4
CEO duality
Big4 Furthermore,
large
firms
are
having
more
of confidence because the sig. was (.154).
independent board members than the small firms. Large
Directors’ ownership not more than 20% in large
firms’ mean is (1.00), whereas small firms’ mean is
firms was greater than the small firms. The large firms’
(.89). The result was not statistically significant at 10%
mean was (.63), whereas small firms’ mean was (.53).
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Jordan Journal of Business Administration, Volume 12, No. 1, 2016
The result was not statistically significant at 10% of
greater than its critical value at 1% of confidence. This
confidence because the sig. level was (.524).
result is supported by Basuony& Mohamed (2014) study
Small firms had a greater percentage than the large
which mentioned that that large size firms tend to
firms in the ownership of the top 3 stockholders is not
disclose more information causing a reduction in
more than 50%. The mean for the small firms was (.58),
information asymmetry and agency costs.
whereas large firms’ mean was (.28). The result was
ROA for small firms was (.067), which was greater
statistically significant at 10% of confidence because the
than the mean of the large firms which was (.019). The
sig. was (.068). Also, the t. test value (1.887) was greater
result was statistically significant at 1% of confidence
than its critical value at 10% of confidence.
because the sig. was (.003) and the t. test value (3.205)
In addition, the ownership of the top stockholder is
was greater than its critical value at 1% of confidence.
not more than 20% in small firms was greater than large
The result is supported by Becker et al. (2010) study
firms. The mean for small firms was (.47), and large
which revealed that there is negative and statistically
firms’ mean was (.28). The results were not statistically
significant relation between the total assets of the firm
significant at 10% of confidence because the sig. was
and their profitability. Moreover, the leverage for large firm (.556) was
(.231). Regarding the corporate governance index, small
greater than the leverage for small firms (.313). The
firms had a greater mean value than large firms. The
result was statistically significant at 1% of confidence
small firms’ mean was (.7105), whereas the large firms’
because the sig. was (.006). Also the t. test value (2.918)
mean was (.6754). The result was not statistically
was greater than its critical value at 1% of confidence. Finally, large firms are audited by big 4 more than
significant at 10% of confidence because the sig. was
small firms. The mean for the large firms was (1.00),
(.438). On the other hand, the IFR index in large firms was
whereas (.63) for the small firms. The result was
greater than small firms. Small firms mean was (.6194),
statistically significant at 1% of confidence because the
whereas large firms’ mean was (.8056). The result was
sig. was (.003). In addition, the t. test value (3.240) was
statistically significant at 1% of confidence because the
greater than its critical value at 1% of confidence.
sig. was (0). In addition, the t. test value (3.932) was Table 9.Distribution of variables based on the firms’ size Firms size Variables
Independent sample T. test
Obs. Large firms
Small firms
T. test
Sig.
CEO duality
19
.84
1.00
-1.837***
.074
Board size (7 to 13)
19
1.00
.79
2.191**
.035
Board independence
19
1.00
.89
1.455
.154
Directors ownership is between 1% and 20%
19
.63
.53
.643
.524
the ownership of top 3 stockholders not more than
19
.28
.58
-1.887***
.068
50%
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Investigating the Relationship…
Zakeya Redha Sanad and Abdalmuttaleb M. A. Musleh Al-Sartawi
Firms size Variables
Independent sample T. test
Obs. Large firms
Small firms
T. test
Sig.
the ownership of top stockholder not more than 20%
19
.28
.47
-1.220
.231
Corporate Governance Index (IND_CG)
19
.675
.710
-.784
.438
IFR Index
19
.805
.619
3.932*
.000
ROA
19
.019
.067
-3.205*
.003
Leverage
19
.556
.313
2.918*
.006
Big4
19
1.00
.63
3.2403*
.00
Statistically confident at: 10%***, 5%**, 1%* C. T. test: 10% = 1.303, 5% = 1.684, 1% = 2.423
at 10% of confidence because the sig. was (.283).
b.2.Firms’ Score of Corporate Governance (CG) Furthermore, the study sample was also divided into
In addition, the ROA for firms with high score of CG
two categories based on the firms’ score of corporate
was greater than firms with low CG score. The mean of
governance: Firms with high score of corporate
firms with high score of corporate governance was
governance and firms with low score of corporate
(.047), while the mean of firms with low score of
governance. Firms that have a greater score of corporate
corporate governance was (.030). The result is supported
governance than the median are considered firms with
by Al- Haddad et al. (2011) study which reveals that that
high score of corporate governance, and firms that have
there is a positive relationship between profitability
corporate governance score less than the median are
measured
considered as firms with low score of corporate
Velnampy and Pratheepkanth (2013) mentioned that
governance. Then, the researchers had found the mean of
there is a possible impact of corporate governance on
the total assets and the other variables for all the firms and
ROE and ROA. However, the current study result was
compared them based on the firms’ score of corporate
not statistically significant at 10% of confidence because
governance. The results are showed in table (10).
the sig. was (.392).
by
(ROA)
and
corporate
governance.
Based on table (10), the result had shown that firms
The leverage of firms with low score of CG was
with high score of corporate governance have a greater
greater than firms with high CG score. The mean of
mean of total assets than firms with low score of
firms with low score of corporate governance was
corporate governance. The mean of firms with high
(.461), while the mean of firms with high score of
score of corporate governance was (1760835.14), while
corporate governance was (.426). This result is
the mean of firms with low score of corporate
consistent with Rijal et al.(2010) study which revealed
governance was (515823.44). This would be also
that corporate governance leads to lower financial
supported by Ashbaugh et al., (1999) who stated that
leverage and disputes in the agencies. However, the
economies of scale suggest that larger firms are more
result was not statistically significant at 10% of
likely to post financial reports at websites than smaller
confidence because the sig. was (.752). Moreover, firms with high score of corporate
ones. However, the result was not statistically significant
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Jordan Journal of Business Administration, Volume 12, No. 1, 2016
governance are audited by big 4 more than firms with
governance are using IFR more than firms with low
low score of corporate governance. The mean for the
score of corporate governance. The mean of firms with
firms with high score of corporate governance was (.86),
high score of corporate governance was (.747), whereas
whereas (.67) for the firms with low score of corporate
the mean firms with low score of corporate governance
governance. This result is supported by prior studies
was (.598). The result was statistically significant at 5%
who mentioned that there is a positive association
of confidence because the sig. was (.021). In addition,
between audit firm size and voluntary disclosure
the t. test value (2.420) was greater than its critical value
(Kelton& Yang, 2008). Nevertheless, the result was not
at 5% of confidence. The result probably shows that
statistically significant at 10% of confidence because the
corporate governance mechanisms would have an impact
sig. was (.196).
on firm’s IFR behavior ( Kelton& Yang, 2008).
Finally,
firms
with high score
of corporate
Table 10.Distribution of variables based on the score of the firms’ corporate governance The score of CG in firms Variables
Independent sample T. test
Obs. High CG
Low CG
T. test
Sig.
Total Assets
29 - 9
1760835.14
515823.44
1.089
.283
ROA
29 - 9
.047
.030
.866
.392
Leverage
29 - 9
.426
.461
-.319
.752
Big4
29 - 9
.86
.67
1.316
.196
IFR Index
29 - 9
.747
.598
2.420**
.021
Statistically confident at: 10%***, 5%**, 1%* C. T. test: 10% = 1.303, 5% = 1.684, 1% = 2.423
Furthermore, ROA mean was the largest in the
b.3. Industry Sectors Moreover, the study sample was analyzed based on
services sectors .088. This is due to the fact that services
the sectors. The researchers had divided them into three
sector employs less assets comparing to other sectors
sectors: financial sector, services sector and industrial
which would contribute in increasing the ROA. Also, the
sector. The industrial sector includes only 3 companies.
number of companies in the services sector is less than
Therefore, the sector size does not represent an accurate
the financial sector so this would affect the ROA
results comparing to the other sectors. One way ANOVA
calculation.
is the technique used in order to compare the means of the
In addition, the table revealed that the leverage of the
three sectors using F distribution. According to table (11),
financial sector was the highest between the sectors .593.
the mean of the total assets of the financial sector was
The financial sector includes banks and insurance
greater than the mean of the services and industrial
companies and they usually have higher leverage than
sectors. One of the reasons is that the financial sector is
the other sectors because their business mainly depends
the largest sector in Bahrain Bourse.
on debts.
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Investigating the Relationship…
Zakeya Redha Sanad and Abdalmuttaleb M. A. Musleh Al-Sartawi
IFR index was the highest in the financial sector and
debtors in order to increase transparency.
this possibly illustrates that financial institutions tend to
However, corporate governance was generally high
disclose more information in order to attract investors. In
among all sectors. However, the highest corporate
addition, financial sector depends on debts more than the
governance level was in the services sectors .736.
other sectors. Therefore, the financial institutions are
Perhaps companies in the services sector are more
more likely to disclose more detailed information to
aligned with the corporate governance code.
Table no. 11.Descriptive analysis – Sectors comparison Variables Sectors
Financial
Services
Industrial
Mean
S.D
Mean
S.D
Mean
S.D
2294863
3641046
142300
285578
405721
669065
ROA
.019
.030
.088
.058
.042
.030
Leverage
.593
.232
.195
.147
.170
.115
IFR Index
.750
.162
.640
.177
.704
.186
CG Index
.666
.142
.736
.132
.722
.096
Total Assets
Observations
23
12
3
Moreover, according to table (12), variables of
100%, the services 91.7% and the financial sector 87%.
corporate governance were compared based on the
The results were not statistically significant because the
sector type. One way ANOVA technique was also used
sig. was (.768). Board independence was also the highest
in order to compare the means of the variables among
in the industrial and services sectors. The industrial and
the sectors.
services sectors were 100%, however, the financial sector was 91.3%. The results were not statistically
Table (12) reported that the mean of all sectors are
significant because the sig. was (.524).
reasonably high which reveals that all the sectors are generally applying the proper mechanisms that are
Furthermore, the results showed that 66.7% of the
related to the board characteristics. The industrial sector
industrial sector directors’ ownership was not more than
got the highest percentage in separating between the
20%, followed by the financial sector 60.9% and the
CEO and the chairman of the board. The percentage of
services sector 50%. The results were not statistically
the industry sector was 100 %, followed by the services
significant because the sig. was (.799).
sector 91.3% and the financial sector 91.3%. The results
Moreover, the ownership of top 3 stockholders not
were not statistically significant because the sig. was
more than 50% variable was the highest in the services
(.878). The sample of the industrial sector is small (3
sector. The services sector was 58.3%, financial sector
companies), therefore, the result does not represent the
was 34.8 and finally the industrial sector 33.3%. The
full sector. In addition, the industrial and services sectors
results were not statistically significant because the sig.
had higher percentage than the financial sector with
was (.282). The ownership of top stockholder not more than 20%
regards to the board size. The industrial sector had
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Jordan Journal of Business Administration, Volume 12, No. 1, 2016
variable was the highest in the services sector 41.7%,
significant because the sig. was (.039). This means that
followed by the financial sector 34.8% and finally the
financial sector tend to hire big4 external auditors most
industrial sector 33.3%. The results were not statistically
likely because when the external auditor is from the
significant because the sig. was (.836).
big4, then corporate governance would be enhanced
Finally, the financial sector was 91.3% audited by
because the external auditor would contribute in
the big4, followed by the services sector 75% and the
monitoring and disclosing transparent information to the
industrial sector 33.3%. The results were statistically
public (Xiao et al., 2004).
Table no. 12.One way ANOVA –Comparison of variables among the sectors Sectors Financial
Variables
Services
Industrial
F
Sig.
0
.130
.878
100
0
.266
.768
0
100
0
.658
.524
50
50
66.7
33.3
.226
.799
65.2
58.3
33.3
33.3
66.7
1.314
.282
34.8
65.2
41.7
50
33.3
66.7
.180
.836
91.3
8.7
75
25
33.3
66.7
3.571
.039
Freq.
Freq.
Freq.
Freq.
Freq.
Freq.
(1)
(0)
(1)
(0)
(1)
(0)
91.3
8.7
91.7
8.3
100
Board size (7 to 13)
87
13
91.7
8.3
Board independence
91.3
8.7
100
Directors ownership is between 1% and
60.9
39.1
34.8
CEO duality
20% the ownership of top 3 stockholders not more than 50% the ownership of top
stockholder
not
more than 20% Big4 Testing the Research Hypothesis
objectively monitor the managements' behavior (Bushee
This section explains the results of the research
et al. 2014). Other researchers mentioned that when the
hypotheses based on the multi regression analysis as
CEO and the chairman is the same person, this would
follows:
cause conflict of interests and it reduces the boards’
H01: There is no relationship between CEO Duality
power to accomplish its governance tasks (Dayton,
and internet financial reporting (IFR) of companies that
1984; levy, 1981). Also, Rechner and Dalton (1991)
are listed in Bahrain Bourse.
mentioned that companies who are having independent
Table (13) shows that there is a negative association
leadership (separation of CEO and chairman of the
between CEO duality and IFR. The explanation can be
board) are consistently outperformed companies relying
that the combination of the CEO and the chairperson
upon CEO duality.
positions is considered as ineffective governance
Accordingly, based on agency theory, shareholders
because it reduces the probability that the board will
would demand for more information disclosed when
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Investigating the Relationship…
Zakeya Redha Sanad and Abdalmuttaleb M. A. Musleh Al-Sartawi
CEO and chairman is the same person and by that the
voluntary disclosure is positively associated with the
IFR level would increase and vice versa. However, the
percentage of outside directors on the board. In addition
result was not statistically significant because the sig.
to the study by Gray and Chau (2011) which also
was (.4107), therefore, the result is not supported. This
revealed that independent non-executive board members
result is consistent with Thangatorai et al. (2011) and
are positively associated with voluntary disclosure of the
Kelton& Yang (2008) studies who mentioned that there
firms. In addition, Ezat and El-Masry (2008) study had
is no association between IFR and CEO duality.
proved that larger board size could increase the
Furthermore, Yap et al. (2011) study revealed that the
timeliness of IFR. However, the result of the current
separation of the CEO and the chairman of the board do
study was not statistically significant. Consequently, the
not explain IFR and one of the reasons is that the
researchers accepted the hypothesis.
implementation of corporate governance standards is
H04: There is no relationship between the directors’
weak. Based on the above discussion, the researchers
ownership and internet financial reporting (IFR) of
accepted the hypothesis.
companies that are listed in Bahrain Bourse.
H02: There is no relationship between board size
The results revealed that when companies are
and internet financial reporting (IFR) of companies that
binding to the variable which stated that director’s
are listed in Bahrain Bourse.
ownership should be between 1 % and 20% and also to
Table (13) shows that there is a significantly positive
the other variable which stated that the ownershipof top
relationship between the board size and IFR. The result
stockholders should not be more than 20% are having
is supported by Yap et al. (2011) study who revealed
less IFR.
that large board size would lead to a broader information
These results are consistent with Eng and Mak
range because the board members are sharing their
(2003) who mentioned that when there is a greater
experience
other.
percentage of managerial ownership, the need for more
Therefore, the voluntary disclosures would increase
disclosure is decreased. And accordingly IFR would
through the companies’ Web pages. The result of the
decrease as well. Other researchers mentioned that
current study was statistically significant. According to
managerial ownership would help in overcoming the
the above discussion, the researchers did not accept the
problem of managerial myopia and it also helps in
hypothesis.
matching the interests of managers and shareholders. By
and
knowledge
between
each
H03: There is no relationship between board
that, the demand for monitoring would decrease (Francis
independence and internet financial reporting (IFR) of
& Smith, 1995, Kelton& Yang, 2008). Additionally, this
companies that are listed in Bahrain Bourse.
would probably be because when the directors own
The results reports that board independence is
small portion of the ownership of the company's' shares,
influencing IFR positively. The researchers point of
they do not pay much attention to disclosing more
view is that independent members encourage disclosing
information
more information to the stakeholders, and IFR is a one
Nevertheless, the study result was not statistically
way of disclosing and disseminating information. The
significant because the sig. was (.850). Subsequently,
current result is consistent with Kelton and Yang (2008)
the researchers did not accept the hypothesis.
and Ajinkya et al. (2005) studies results who stated that
and
hence,
IFR
would
decrease.
H05: There is no relationship between the ownership
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Jordan Journal of Business Administration, Volume 12, No. 1, 2016
of top 3 shareholders and internet financial reporting
interested than small firms to use the information
(IFR) of companies that are listed in Bahrain Bourse.
technology to enhance financial reporting to meet the greater demand for information required.
The result reveals that when the ownership of the top stockholder is in the proper level (not more than 20%)
Also table (13) reports that there is a positive
based on Institutional Shareholder Services Inc. (ISS)
relationship between ROA and IFR. However the result
recommendation, the level of IFR would decrease. a
was not statistically significant. The result is also
possible explanation is that when ownership of the top
supported by Islam et al. (2014) who mentioned that
stockholder is high, his influence and the monitoring of
profitability is not significant in explaining the level of
the firms’ activities would increase and by that the level
voluntary disclosure of financial information.
of disclosure would decrease. Also, another explanation
Moreover, the table reported that there is a positive
could be that top stockholder depends on Big4 in
relationship between leverage of firms and the level of
disseminating
company.
disclosing information using the internet. The finding is
Therefore, the relationship between the top stockholder
consistent with Debreceny et al. (2002) who stated that
and the IFR level would be negative. Nevertheless, the
management would disclose voluntarily information via
study result was not statistically significant because the
the internet in order to allow the creditors to monitor
sig. was (0.681). Hence, the researchers accepted the
continuously the issues related to the company and help
hypothesis.
them to evaluate the ability of the company to pay back
the
information
of
the
its financial obligations on time. However, the study
H06: There is no relationship between the ownership
result was not statistically significant.
of top and internet financial reporting (IFR) of
Additionally, the table reports that there is a positive
companies that are listed in Bahrain Bourse. According to the table (13), there is a positive
relationship between IFR and sector type. This shows
relationship when the top 3 stockholders ownership does
that IFR varies according to the sector type. However,
not exceed 50% in the company and the level IFR. The
the study result was not statistically significant. Finally,
reason is that when the stockholders are holding less
the table illustrated that there is a positive relationship
than 50% of the shares, it means that there are no major
between the firms who are audited by Big4 and the level
shareholders in the company who will take care of
of the internet financial reporting. This result is
monitoring and influencing the company’s performance
consistent with previous studies which indicate that there
in order to reduce the agency problem. Therefore, the
is a positive association between audit firm size and
stockholders
voluntary disclosure (Xiao et al., 2004; Kelton& Yang,
will
demand
for
disclosing
more
2008) studies.
information in order to monitor the performance of the company and by that increasing the IFR. However, the
The explanation of this result is that the aim of
study result was not statistically significance. Thus, the
corporate governance is to resolve problems that arise
researchers accept the hypothesis.
from the principal-agent relationship, one measure
Additionally, the study reveals that there is a positive
which could contribute in helping corporate governance
relationship between internet financial reporting and the
in reducing the agency problem is the external auditors'
firms’ size. The result is consistent with Xiao et al.
involvement. Furthermore, the audit serves as a
(1996) who mentioned that large firms are more
signaling mechanism to the shareholders of a company
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Investigating the Relationship…
Zakeya Redha Sanad and Abdalmuttaleb M. A. Musleh Al-Sartawi
that information disclosed by the company’s directors
researchers had investigated the relationship between
can be reliable. (Ojo,2009). Moreover, according to
corporate governance and internet financial reporting in
Beattie (2001), financial audit is considered a vital part
Bahrain Bourse listed companies.
of corporate governance that makes management accountable to the stockholders for its stewardship of the
Table 13.Multi Regression Results
company .Therefore, the external auditor’s role and the
Beta
T. test
Sig.
CEO duality
-0.062
-0.836
0.4107
governance are fundamental complements in facilitating
Board size (7 to 13)
0.173
2.343
0.0274
the achievement of the targeted aims of corporate
Board independence
0.077
0.927
0.362
governance. (Ojo,2009).
Directors ownership is
-0.054
-0.862
0.396
0.010
0.190
0.850
-0.032
-0.415
0.681
audit
committee’s
responsibilities
in
Variables
corporate
The study result was
statistically significant.
between 1% and 20%
After the above discussion for the sub-hypotheses
the ownership of top 3
and the control variables of the model, the results reveal
stockholders not more
that only the board size from the independent variables
than 50%
and the big4 from the control variables are affecting IFR.
the ownership of top
However, the study model tests the relationship between
stockholder not more than
independent variables (CG) and the dependent variable
20%
(IFR). Therefore, the researchers accepted the null
Firm size
0.011
0.361
0.720
hypothesis as there is no relationship between corporate
ROA
0.137
0.295
0.770
Leverage
0.144
1.576
0.127
Sector type
0.032
1.193
0.243
Big 4
0.228
3.693
0.001
governance and IFR. Conclusion and Recommendations: Solid corporate governance mechanisms encourage managers to disclose more information and this is because it can improve the monitoring of managers’ disclosure strategies and reduces the benefits of withholding information (Madhani, 2014). According to Ramadhan (2014), good corporate governance would
governance
7.907
Sig (F)
0.00
information on how to use the latest display in
and comprehensive disclosure of all related information performance,
F
presentation dimensions. The content dimension reveals
companies and make sure to provide accurate, timely, financial
0.776
The study used IFR index that consists of content and
strengthen the internal control procedures of the
including
R²
disseminating the corporate information and website
of
design. Moreover, the presentation dimension reports the
corporation and the ownership. Therefore, internet
usage of the display criteria in distributing the corporate
financial reporting is considered as a disclosure tool that
information and the companies' web design (Khan &
is aimed at lowering the information asymmetry between
Ismail, 2011).
shareholders and managers of any firm (Debreceny et al.
Multi regression analysis was used in order to test the
2002). Thus, IFR would contribute in enhancing
relationship between the variables. Overall, the results
corporate governance of the firms. Accordingly, the
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Jordan Journal of Business Administration, Volume 12, No. 1, 2016
indicate the level of corporate governance and internet
Accordingly, the acceptable level of internet
financial reporting in Bahrain listed companies is
financial reporting of the listed companies is due to Big4
appropriate. But, the relationship between corporate
companies and it is influenced by the boards’
governance and internet financial reporting is weak due
characteristics but in a limited way. Furthermore,
to the fact that the board characteristics do not affect the
disclosing financial reports through the internet is not a
level of disclosing information via the internet (IFR).
mandatory requirement in Bahrain. Also, Bahrain
However, the results revealed that board size have a
corporate governance code is based as comply or explain
positive relationship with IFR. The result is supported by
framework, which illustrates that companies should
Yap et al. (2011) study who revealed that large board
comply with the code or should give a justification in
size would lead to a broader information range because
case of non-compliance. According to Ramadhan
the board members are sharing their experience and
(2014), most developing countries, and Bahrain in
knowledge between each other. Therefore, the voluntary
particular, do not have strong policy on voluntary
disclosures would increase through the companies’ Web
disclosure. Therefore, the code contains standards and
pages.
recommendations but the implementation of the code positive
might still need to be improved. This is due to the fact
relationship with the disclosure through the internet, and
that Bahrain market is small and also considered as part
this is probably because the aim of corporate governance
of the developing countries and this would affect the
is to solve problems that result from the principal-agent
execution
relationship. Consequently, the involvement of the
governance code. The mentioned reasons would also
external auditors' would contribute in helping corporate
contribute in making the results of the current study to
governance
problem.
be differing from Kelton and Yang (2008) findings in
Furthermore, the audit serves as a signaling mechanism
different aspects. Their study was conducted in US
to the shareholders of a company that information
market which is a developed market where corporate
disclosed by the company’s directors can be reliable.
governance mechanisms are applied strictly. Moreover,
(Ojo,2009). Moreover, according to Beattie (2001),
the
financial audit is considered an important part of
(Agboola&Salawu,
corporate
management
2012) studies that reveal that companies audited by firms
accountable to the shareholders for its stewardship of the
affiliated with the Big 4 international auditing firms
company .Therefore, the external auditor’s role and the
were more likely to engage in Internet financial
audit
reporting.
Moreover,
Big4
in
companies
reducing
governance
committee’s
that
the
have
a
agency
makes
responsibilities
in
corporate
and
current
implementation
study
results
2012
and
of
are
the
corporate
supported
by
Nurunnabi&Hossain,
governance are fundamental complements in helping to
Mousa and Desoky (2012) stated that companies
achieve the desired aims of corporate governance. (Ojo,
disclose information in order to eliminate agency costs.
2009). The study result was statistically significant. This
Therefore, this would enhance the confidence of the
study is also consistent with other previous studies
investors in the reported financial information. Similarly,
which indicate that there is a positive association
Basuony and Mohamed (2014) added that firms tend to
between audit firm size and voluntary disclosure (Xiao
disclose more information in order to decrease
et al., 2004; Kelton& Yang, 2008) studies.
information asymmetry. Also, Debreceny et al. (2002)
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Investigating the Relationship…
Zakeya Redha Sanad and Abdalmuttaleb M. A. Musleh Al-Sartawi
had mentioned that IFR is one of the tools that
a company. In addition, Kelton and Yang (2008)
disseminate corporate total disclosure that is aimed to
mentioned corporate governance has an impact on
lower information asymmetry between the managers and
internet financial reporting. Therefore, the researchers
stakeholders. Therefore, the study recommends Ministry
suggests investigating whether the presentation of the
of Industry and Commerce, Central Bank of Bahrain,
information in the companies’ websites as part of
Bahrain bourse and National Corporate Governance
internet financial reporting has an impact on the decision
Committee to encourage the companies to disclose their
making process in Kingdom of Bahrain.
information through the internet in order to increase the
Furthermore, based on the study results, the
transparency and fairness and by that the free rider
researchers suggest having a further study that
problem and agency cost would be eliminated.
investigates
the
relationship
between
corporate
governance and big4 companies. In addition, the Limitations and scope for further studies
researchers noticed that there are many institutional
The study was conducted in Bahrain, thus, the
investors in Bahrain listed companies. As mentioned by
sample size is small. In addition, there are few
prior studies, institutional investors and IFR are affecting
companies that do not have a website. Also, some of the
each other. Bushee&Noe (2000) had mentioned that
companies’ websites were not working and few websites
firms with higher disclosure have greater institutional
did not contain investors' relations section and hence, the
ownership. However, the researchers had noticed that
information was not possibly provided. Therefore, the
there are limited studies about this relationship in
study findings may not be generalizable.
Bahrain. Hence, the researchers suggest having a further
Moreover, a study by Gurbuz et al. (2010) had
study in order to figure out whether there is a
discovered that good corporate governance mechanisms
relationship between IFR and institutional investors in
would lead to improving the decision making process of
Bahrain.
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اﻟﻌﻼﻗﺔ ﺑﻳن اﻟﺣﺎﻛﻣﻳﺔ اﻟﻣؤﺳﺳﻳﺔ واﻻﻓﺻﺎح اﻟﻣﺎﻟﻲ ﻋﺑر اﻻﻧﺗرﻧت :دﻟﻳﻝ ﻣن ﺑورﺻﺔ اﻟﺑﺣرﻳن 2
زﻛﻳﺔ رﺿﺎ ﺳﻧد 1وﻋﺑداﻟﻣطﻠب ﻣﺣﻣد ﻣﺻﻠﺢ اﻟﺳرطﺎوي
ﻣﻠﺧـص أﺳﻬﻣت اﻟﻌوﻟﻣﺔ واﻟﺗطور اﻟﺗﻛﻧوﻟوﺟﻲ اﻟذي ﻳﺷﻬدﻩ اﻟﻌﺎﻟم ﻓﻲ زﻳﺎدة اﻫﺗﻣﺎم اﻟﺑﺎﺣﺛﻳن ﺑﻣوﺿوع اﻟﺣﺎﻛﻣﻳﺔ اﻟﻣؤﺳﺳﻳﺔ واﻹﺑﻼغ اﻟﻣﺎﻟﻲ ﻋﺑر اﻻﻧﺗرﻧت .وﻟﻛون ﻣﻣﻠﻛﺔ اﻟﺑﺣرﻳن ﻣن اﻟدوﻝ اﻟﺗﻲ ﺳﻌت إﻟﻰ ﺗﺑﻧﻲ ﺗطﺑﻳق ﻣﺑﺎدئ اﻟﺣﺎﻛﻣﻳﺔ اﻟﻣؤﺳﺳﻳﺔ ﻓﺈن ﻫذﻩ اﻟدراﺳﺔ ﺳﻌت اﻟﻰ اﺧﺗﺑﺎر اﺛر اﻟﺣﺎﻛﻣﻳﺔ اﻟﻣؤﺳﺳﻳﺔ ﻋﻠﻰ اﻹﺑﻼغ اﻟﻣﺎﻟﻲ ﻋﺑر اﻻﻧﺗرﻧت ﻓﻲ اﻟﺷرﻛﺎت اﻟﻣدرﺟﺔ ﺑﺑورﺻﺔ اﻟﺑﺣرﻳن .وﻗد ﻗﺎم اﻟﺑﺎﺣﺛﺎن ﺑﻌد ﻣراﺟﻌﺔ اﻟﻌدﻳد ﻣن اﻟدراﺳﺎت اﻟﺳﺎﺑﻘﺔ ذات اﻟﻌﻼﻗﺔ ﺑﺗطوﻳر ﻧﻣوذج ﻟﻠدراﺳﺔ وﻗﺎﻣﺎ ﺑﺎﺳﺗﺧدام ﺗﺣﻠﻳﻝ اﻻﻧﺣدار اﻟﻣﺗﻌدد ﻻﺧﺗﺑﺎر ﻓرﺿﻳﺎت اﻟدراﺳﺔ .وﻗد أظﻬرت ﻧﺗﺎﺋﺞ اﻟﺗﺣﻠﻳﻝ اﻹﺣﺻﺎﺋﻲ وﺟود ﻋﻼﻗﺔ ﻣﺣدودة ﺑﻳن اﻟﺣﺎﻛﻣﻳﺔ اﻟﻣؤﺳﺳﻳﺔ -ﻣﻘﺎﺳﺔ ﺑﺧﺻﺎﺋص ﻣﺟﻠس اﻹدارة -واﻹﺑﻼغ اﻟﻣﺎﻟﻲ ﻋﺑر اﻻﻧﺗرﻧت؛ إﻻ أﻧﻪ وﺑﺎﻟرﻏم ﻣن ذﻟك ﻓﻘد ﻛﺎن ﻟﻧوع ﻣؤﺳﺳﺔ اﻟﺗدﻗﻳق ،وﺣﺟم ﻣﺟﻠس اﻹدارة ﺗﺄﺛﻳ ار اﻳﺟﺎﺑﻳﺎ ﻋﻠﻰ اﻹﺑﻼغ اﻟﻣﺎﻟﻲ ﻋﺑر اﻻﻧﺗرﻧت .وﻣن اﺟﻝ ﺗﺣﻘﻳق اﻟﻣزﻳد ﻣن اﻟﺷﻔﺎﻓﻳﺔ ﻓﻲ اﻹﺑﻼغ ﻋن اﻟﻣﻌﻠوﻣﺎت ﻓﻘد أوﺻت اﻟدراﺳﺔ اﻟﺟﻬﺎت اﻟﻣﻧظﻣﺔ ﺑﺿرورة اﻟﻘﻳﺎم ﺑﺈﺻدار دﻟﻳﻝ ﻟﻺﺑﻼغ اﻟﻣﺎﻟﻲ ﻋﺑر اﻻﻧﺗرﻧت ﺗﻠﺗزم ﺑﻪ اﻟﺷرﻛﺎت اﻟﻣدرﺟﺔ ﻓﻲ ﺑورﺻﺔ اﻟﺑﺣرﻳن. اﻟﻛﻠﻣﺎت اﻟداﻟﺔ :اﻹﺑﻼغ اﻟﻣﺎﻟﻲ ﻋﺑر اﻻﻧﺗرﻧت ،اﻟﺣﺎﻛﻣﻳﺔ اﻟﻣؤﺳﺳﻳﺔ ،اﻹﻓﺻﺎح اﻟطوﻋﻲ.
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