Impact of Internet Financial Reporting on Emerging Markets

Journal of International Business Research, Vol. 8, No. 2, pp. 21-41, 2009

20 Pages Posted: 27 Sep 2007 Last revised: 9 Jun 2014

See all articles by Shirley A. Hunter

Shirley A. Hunter

Tufts University - The Fletcher School of Law and Diplomacy

Murphy Smith

Texas A&M University-Corpus Christi-Department of Accounting

Date Written: May 10, 2011

Abstract

Application of information technology to gain a competitive advantage is well known and often used by business firms in developed countries. A fairly recent technological development is use of the Internet to provide corporate financial information, that is, Internet financial reporting. The research question posited by this study is: Do investors value emerging market firms that attempt to reduce information asymmetry by using information technology? This study uses the efficient market hypothesis to test the effects of two economic events on the market returns of emerging markets firms that engage in Internet financial reporting. At the macro-economic level, the event date is defined as the date the country deregulated the telecommunications industry granting commercial access to Internet providers. At the micro-economic level, the event date is based on the firm's announcement of the launching of its website. This study offers empirical evidence of the longitudinal effects of Internet technology i.e., timely dissemination of financial information, on emerging markets. The analysis reveals positive dispersions in market price and volume around the event dates. Market performance of securities listed on emerging market stock exchanges does improve after commercialization of the Internet.

Keywords: Internet financial reporting, emerging markets, firm valuation

JEL Classification: M41, N20, F23, G14, D82

Suggested Citation

Hunter, Shirley A. and Smith, Murphy, Impact of Internet Financial Reporting on Emerging Markets (May 10, 2011). Journal of International Business Research, Vol. 8, No. 2, pp. 21-41, 2009. Available at SSRN: https://ssrn.com/abstract=1017078

Shirley A. Hunter

Tufts University - The Fletcher School of Law and Diplomacy ( email )

Medford, MA 02155
United States

Murphy Smith (Contact Author)

Texas A&M University-Corpus Christi-Department of Accounting ( email )

6300 Ocean Dr
Corpus Christi, TX 78412
United States

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