An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Andrea S. Kelton
University Of South Florida

Ya - Wen Yang
University of Miami

Abstract: This study examines the association between a firm’s corporate governance mechanisms and corporate transparency in the Internet reporting environment, measured by the level of a firm’s Internet financial reporting (IFR) behavior. We measure corporate governance by shareholder rights, ownership structure, board composition, and audit committee characteristics. We develop a disclosure index to measure the extent of each sample firm’s IFR by presentation format, information content, voluntary disclosures, and required filings. The findings indicate that corporate governance mechanisms influence a firm’s Internet disclosure behavior, presumably in response to the information asymmetry between management and investors and the resulting agency costs. Our results suggest that new regulatory guidance in corporate governance leads to improved corporate transparency via Internet financial reporting.

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