The voluntary disclosure of internet
financial reporting (IFR) in an emerging
economy: a case of digital Bangladesh
Mohammad Nurunnabi and Monirul Alam Hossain
Abstract
Purpose – The present study seeks to paint the current state of voluntary disclosure of internet financial
reporting (IFR) in Bangladesh as an example of an emerging economy and to investigate empirically
some company characteristics as determinants of such practice.
Design/methodology/approach – Using a sample of 83 listed companies in Bangladesh in the year
2009 and the disclosure index of Deller et al., Marston, Xiao et al. and Marston and Polei and comments
from the users and investors of Bangladesh, the study employs statistical analysis to investigate the
association between a number of company characteristics and the extent of voluntary disclosure of IFR.
Findings – The findings revealed that only 29.12 percent (83) companies had web sites out of the 285
listed companies and only 33.34 percent (28) companies’ provided financial information. Out of seven
variables, only big audit firms and non-family ownership variables were significantly associated with the
levels of voluntary disclosure. Another important result revealed that despite the mandatory
requirements of having audit committee in Bangladesh, the companies without the audit committee
were disclosing voluntary information more and it raised the question on the lack of regulatory
enforcement in Bangladesh.
Research limitations/implications – The scope of this study is limited to a single country; it would be
interesting to replicate this study to a group of emerging countries which have many similarities to the
Bangladesh environment.
Originality/value – To the best of the authors’ knowledge, no studies have been conducted on IFR in a
South Asian emerging country, in particular Bangladesh. The study also is the first of its kind to examine
the whole population of a period in any country which enhances contribution to IFR literature. Unlike the
prior studies conducted in emerging countries, the study contributes not only to the present state of IFR
by the listed companies in Bangladesh but also the connectivity problem between the dream and reality
of the digital Bangladesh concept. The study also finds that the companies’ IFR practices are not
influenced by ‘‘Digital Bangladesh’’ concept.
Keywords Internet financial reporting, Voluntary disclosure, Emerging economies, Bangladesh,
Emerging markets, Information disclosure
Paper type Research paper
1. Introduction
Appropriate disclosure of financial data relevant to users is always a key issue in financial
reporting (Prodhan, 1986). At present, a significant number of companies in emerging
economies are making financial reporting through their web sites. Most of the recent
research provides evidence of the influence of the internet on financial disclosure practices
in both developed and emerging countries. During the last decade, the influence of the
internet on financial disclosure in emerging countries increased. Several IFR studies have
been carried out in developed countries (e.g. Marston and Leow, 1998; Pirchegger and
Wagenhofer, 1999; Ashbaugh et al. 1999; Brennan and Hourigan, 2000; Ettredge et al.,
2002; Marston, 2003; Oyelere et al. 2003; Bollen et al., 2006; Bonso
´
n and Escobar, 2006;
Abdelsalam et al., 2007; Despina and Demetrios, 2009) and there is a dearth of research on
IFR practices of firms located in the context of emerging economies like Bangladesh
DOI 10.1108/15587891211190688 VOL. 6 NO. 1 2012, pp. 17-42, Q Emerald Group Publishing Limited, ISSN 1558-7894
j
JOURNAL OF ASIA BUSINESS STUDIES
j
PAGE 17
Mohammad Nurunnabi is
Senior Lecturer in
Accounting at the Business
School, Edge Hill University,
Ormskirk, UK.
Monirul Alam Hossain is
Professor in Accounting at
East West University,
Dhaka, Bangladesh.
Received: 29 November 2010
Accepted: 17 May 2011