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Internet reporting in microfinance institutions

Internet reporting in microfinance institutions Purpose – This paper aims to present research on how and why microfinance institutions (MFIs) disclose financial and social information on the internet. Legitimacy theory provides the theoretical framework. Design/methodology/approach – The empirical study analysed factors influencing MFIs to publish financial and social information on the internet. The model was tested using regression analysis. The sample consisted of publicly available data from the web sites of 273 MFIs. Findings – The study found that MFIs' internet presence overall is scarce and that greater levels of disclosure are needed. It was found that large MFIs with a high degree of public exposure on the internet disclose greater amounts of information on their web sites than smaller MFIs with a low degree of public exposure. It was also found that for‐profit MFIs disclose more financial information on their web sites, while non‐profit non‐governmental organisations (NGOs) reveal more social information. Practical implications – MFIs should be proud to tell the world what they are doing. MFI managers need to remember that transparency increases funds from donors. Donors are mostly based in developed countries, so the internet plays a key role in disclosure and attracting potential donors. Thus, managers of MFIs are encouraged to increase disclosure levels – especially on the internet. Originality/value – Academic research into the factors that influence MFIs' internet disclosure is still scarce. This is an important area of study because full disclosure offers enormous benefits. Since MFIs have a social mission, they are legitimated in the eyes of their donors by disclosing social information. Since they are also financial institutions, they have to show that they use the funds they receive efficiently. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Online Information Review Emerald Publishing

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Publisher
Emerald Publishing
Copyright
Copyright © 2008 Emerald Group Publishing Limited. All rights reserved.
ISSN
1468-4527
DOI
10.1108/14684520810889709
Publisher site
See Article on Publisher Site

Abstract

Purpose – This paper aims to present research on how and why microfinance institutions (MFIs) disclose financial and social information on the internet. Legitimacy theory provides the theoretical framework. Design/methodology/approach – The empirical study analysed factors influencing MFIs to publish financial and social information on the internet. The model was tested using regression analysis. The sample consisted of publicly available data from the web sites of 273 MFIs. Findings – The study found that MFIs' internet presence overall is scarce and that greater levels of disclosure are needed. It was found that large MFIs with a high degree of public exposure on the internet disclose greater amounts of information on their web sites than smaller MFIs with a low degree of public exposure. It was also found that for‐profit MFIs disclose more financial information on their web sites, while non‐profit non‐governmental organisations (NGOs) reveal more social information. Practical implications – MFIs should be proud to tell the world what they are doing. MFI managers need to remember that transparency increases funds from donors. Donors are mostly based in developed countries, so the internet plays a key role in disclosure and attracting potential donors. Thus, managers of MFIs are encouraged to increase disclosure levels – especially on the internet. Originality/value – Academic research into the factors that influence MFIs' internet disclosure is still scarce. This is an important area of study because full disclosure offers enormous benefits. Since MFIs have a social mission, they are legitimated in the eyes of their donors by disclosing social information. Since they are also financial institutions, they have to show that they use the funds they receive efficiently.

Journal

Online Information ReviewEmerald Publishing

Published: Jun 20, 2008

Keywords: Disclosure; Internet; Financial reporting

References