Board composition and corporate reporting on Internet: Evidence from Sri Lanka

Abstract

Web-based corporate disclosures are becoming increasingly popular among businesses since Corporate Internet Reporting (CIR) allows for timely reporting, customization of financial reporting, reaching a broader audience, and reducing information asymmetry. As a result, the phenomenon of CIR has been widely accepted in recent scholarly works; however, the majority of studies in this area have focused on the economic aspects of CIR, and only a minority have considered the impact of corporate mechanisms like board characteristics in developing countries, especially Sri Lanka. This paper aims to investigate the connection between board composition and CIR practices in Sri Lanka, employing secondary data gathered from the websites of 97 sample companies in 2022. The dependent variable is CIR, which is evaluated using a comprehensive index containing 35 items pertaining to the primary aspects of content and presentation, and the independent variable is board composition, which includes board size, board independence, CEO duality, board meetings, and board gender diversity. The results of a regression analysis indicate that board size, board independence, and CEO duality positively correlate with CIR. This study implies that Sri Lankan regulatory bodies and policymakers must take action to promote such reporting practices. This study expands on earlier CIR research by showcasing the efficiency of corporate governance systems, particularly board features, in adopting internet reporting practices for Sri Lankan companies. The study has focused on one aspect of corporate governance mechanisms, namely the characteristics of boards. Future research may investigate the influence of ownership structure and financial transparency on CIR practices. Moreover, future studies can investigate Sri Lanka's cultural, legal, and economic conditions impact CIR practices.