|
COPYRIGHT 2005 Institute of Management Accountants
Companies increasingly use their websites to voluntarily disclose a broad spectrum of corporate information. We assessed the types of information that 396 publicly traded companies put on their websites and found the amount of information reported varied considerably depending on the type of disclosure, the company's industry, and its size.
Today, every company seems to have a website that contains at least a brief description of its operations and a list of its products. Some provide additional information, such as the company's market share, mission statement, and financial reports, while others go even further. For instance, the websites for Delphi, Johnson & Johnson, and Cisco Systems present a more complete picture by including marketing strategies, future industry trends, and key risks faced by the company. Do you know what your company's website contains and how it compares to the disclosures made by others?
AN EVOLVING MEDIUM
Public companies must report certain financial information as required by generally accepted accounting principles (GAAP) and the Securities & Exchange Commission (SEC). But firms often provide information through conference calls, news releases, and annual reports that goes beyond what is required. Besides traditional methods of reporting, firms now also use their websites to make these disclosures.
One advantage of a website is that information can be distributed to a large audience at a fairly low cost. Also, fewer constraints are imposed on the size and form that disclosures can take on the Internet. For example, firms can include audio and video content, which is impossible in a typical annual report. It is not surprising that corporate disclosure on the Internet is widespread.
Both the Financial Accounting Standards Board (FASB) and the SEC recently completed initiatives dealing with corporate disclosure. Between January 2000 and June 2001, the FASB published its findings for the Business Reporting Research Project (BRRP). (1) The BRRP identified voluntary disclosures of financial and nonfinancial information that firms provide through traditional methods of reporting as well as company websites.
At the same time, the SEC adopted Regulation FD (Fair Disclosure), which went into effect in October 2000. Regulation FD attempts to level the playing field with respect to voluntary disclosures. Firms that reveal material disclosures, such as earnings projections between scheduled announcements, to select groups have 24 hours or less to release the same information to the public.
DATA AVAILABLE ON CORPORATE WEBSITES
As with more traditional methods of voluntary reporting, differences exist in the nature of the disclosures companies make on their websites. With the wide variety of data available on corporate websites, we faced the difficult task of deciding which items to include in this study. To select the attributes,...
Read the full article for free courtesy of your local library.
|
Bookmark this article
Print this article
Link to this article
Email this article
Digg It!
Add to del.icio.us
RSS
