Does Internet Financial Reporting Reduce Information Asymmetry?
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Abstract
Since 2015 Indonesia regulator, Financial Service Authorities (OJK) has mandated Peraturan OJK No.8/POJK.04/2015 about Public company website. This rules mandated every public listed companies in Indonesia Stock Exchange to develop their own website and disclose mandatory information like financial statements or social responsibility through their website. This practice is commonly known as internet financial reporting (IFR). Internet Financial Reporting (IFR) is simply defined as disclosure practice using company’s website. Although most companies have been mandated to disclose its reports on website, their compliance to the this type of IFR disclosure has not been widely studied. This study investigate the role of website disclosure through IFR and its effect in reducing information asymmetry among manufacturing companies in Indonesia. Using IFR Index to measure the website disclosure quality, the result shows that the disclosure quality is still low, as shown by the average score of 56.57%. However the internet financial reporting has negative significant effect on information asymmetry. The study concludes that IFR enable companies to reduce the information asymmetry by optimizing their website as a communication channel and information to stakeholders.
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