Data Presentation & Analysis
One hundred percent of the firms confirmed existence of a companies Website. 44 % (7/16) confirmed online reporting with the earliest period of this type of reporting mentioned being 1999. This level of online reporting compares with 70% (9/27) as observed by the online investigation. (See Internet Attribute Sheet in Appendix I). This brings into question the respondents actual knowledge and awareness of what is available on their companies' Websites. Three actually responded in the negative to online reporting while an investigation of their particular companies' Websites showed otherwise. In is also likely that the general population was not truly represented by the companies which responded.
Over 75% of the respondents voiced the main reason for reporting online as the need to make information available to current and potential investors, customers and other stakeholders. Other reasons sited included the availability of information to stakeholders anywhere in the world, making a superior service available to their stakeholders at very low cost to the organization and following technological trend. 10% of the respondents did not know why their companies choose to report.
Of the thirty two publicly listed companies 84% were involved in online reporting. Of these 63% a Chairman/CEO's report, 74% financial summary, 84% comparative Balance Sheet, 89% Profit and Loss Statement, 74% Cash Flow Statement, 74% Notes to financial Statements, 63% Auditors report and 58% interim reports. No company had financial ratios posted. The data from the questionnaire compares favorably with the preceding except in the case of the financial ratios. 30% of the responded confirmed the availability of ratios online. This inconsistency can be explained by the dynamic nature of the environment in which the Websites exists. In is quite possible that this particular set of data became inexistent at the time on the Website investigation. Further, given the complexity of a few of the Websites (multiple Web links) the ratios may have been available but not discovered at the time of investigation. Among the other attributes which the respondents suggested were available were Management Discussion and Analysis (MD&A), (10yr) comparative Financial Reviews and Balance Sheet. One company hosted live Web casts to entertain the questions customers and investor may have.
Guidelines and Standards Establishment
The TTSE is not aware of any global guidelines and it does not see the need for any separate standards for online reporting. In its view, the need for full disclosure and timely information are required, whatever the medium of information dissemination, so that the same standards that govern traditional reporting could suffice. This was basically the view echoed by the companies.
57% of the respondents highlighted that their firms have established guidelines to guide the online financial reporting process with 50% of the mainly adopting the existing International Reporting Standards (IRS's) or the Financial Institutions Act (banks) use in paper based reporting. The other firms have made a decision to post only the major aspects of their financial statements which includes the chairman's report, balance sheet and the profit and loss statement. Of the 43% without established guidelines the IFRS's was also indicated as the means of determining what to report. One company however was involved in ad hoc in their financial reporting online – i.e. what users suggested they wanted available (user driven). This is a clear indication that the firms are on uncharted waters in terms of online reporting with significant uncertainty in relation to what and how they should report. As a result the majority utilize what is clear to them in terms of GAAP i.e. the IFRS's.
The Role of the TTSE in Internet financial Reporting
The Trinidad & Tobago Stock Exchange (TTSE) is a privately owned company which functions to “facilitate the efficient mobilization and allocation of capital, fair and orderly secondary market trading in securities and the efficient clearing and settlement of transactions within a dynamic legal and regulatory framework that instills confidence in the integrity of exchange and related institutions” (www.ttse.gov.tt). The TTSE neither facilitates the online reporting process of companies nor monitors what these public companies report online. However, contrary to this 29% (2/7) of the respondents were in the affirmative with whether or not the TTSE has an input in their process of internet reporting. Of these, 50% (1/2) described their role as regulatory while the other 50% described it as a combination of regulatory and monitoring. This demonstrates a situation where publicly listed companies are uncertain of the boundaries of the TTSE in relation to the internet reporting and in particular whether the TTSE has jurisdiction over the process of reporting online.
Opportunities and Challenges
Cost, technology and expertise were some of the major challenges for the respondents who report online. However, for one company the challenge was inadequate human resource in its IT department while for another it was making use of the limited online space to attend to the varying need of the different users. This was also combined with the different processing speeds of the computers used by the different users, which results in inequitable access to information.
On the other hand, some of the unique opportunities that internet reporting afforded the companies includes global reach/investor exposure, availability of timely information to facilitate comparability (horizontal and vertical). Further, online reporting facilitates the easy storage of the financial data.
In the opinion of the TTSE, publicly listed companies in Trinidad & Tobago face numerous challenges in terms of reporting online. Some of these challenges include lack of knowledge about the internet; insufficient staffing in the area of Information Technology (IT) and a view held by many in senior management that there is no need for financial reporting online. In terms of comparison with the traditional medium of financial reporting the TTSE thinks online financial reporting compares favourably with the cost savings it can offer companies: in terms of providing a very high quality dissemination medium that can provide investors with information that fit their needs and the efficiency it provides in terms of easier access especially to non-shareholders.
In addition, the TTSE holds the view that internet financial reporting can aid the development of a more efficient of the capital market in Trinidad & Tobago. It also sees it as important for cross-listed companies to have their reports online, since access to their statements can be difficult for local investors.
Websites but no Financial Reporting
56% of the companies indicated that they did not report online. Of these companies, 33% cited cost as a major reason for not reporting, while 22% voiced technology and expertise. The remaining 44% had a variety of reasons. These include organizational culture, the fact that the Stock Exchange does not require it and for the simple reason it is not an expectation of customers and investors. One company highlighted the completion of a cost benefit analysis and based its decision of not reporting online on these results, since the costs outweighed the benefits of reporting online by far. In terms of ranking by the respondents, cost was the most significant reason cited for not reporting online.
90% (9/10) of the companies did not consider themselves forgoing any opportunities by not reporting online. The other company which thought it was forgoing opportunities voiced two reason:
Inability to get its corporate image to the wider business environment and;
Inability to facilitate customers' easy access to the financial services they provide.
In terms of future development of online financial reporting, the TTSE sees it as becoming one of the requirements for listing with the Stock Exchange. It also thinks that it may develop an online database of financial reports along similar lines as the EDGAR database in the US . Also in the future, investors will be able to view the financial information of companies the same time the TTSE does, thus bringing greater efficiency to the Trinidad & Tobago capital market.