Internet financial reporting : perceptions of Maltese individual shareholders and its usability

Abstract

Purpose: The study concludes that retail shareholders are not satisfied with the current state of the law. The reason for this is because the burden of obtaining a physical copy of the Financial Report has now shifted onto the shareholder due to the Transparency Directive 2013/50/EU. The purpose of this study is to determine the perceptions and usability of Internet Financial Reports by Maltese Shareholders. Design: A qualitative research approach was adopted to fulfill the objectives of this study. A focus group was conducted with seven members enrolled with the Malta Association of Small Shareholders. Findings: The findings highlight the advantages of Internet Financial Reports such as searchability, quick accessibility, the possibility for interactive content, online archives, and cost savings for Maltese Listed Entities. However, disadvantages include difficulties in note-taking and making comments, cognitive overload from hyperlinks, and complete reliance on company websites. Good communication in Annual Financial Reports is regarded as crucial, with transparency and timely reporting of information being emphasised. Respondents suggested that in order to improve the usability and understandability of Internet Financial Reports, harmonisation of Financial Reporting terminology and increased technological literacy are needed. Furthermore, the issuing of quarterly reports would help to improve transparency and shareholders’ understanding of the company at hand. Conclusions; Despite the advantages of Internet Financial Reports, most shareholders still prefer physical copies of Financial Reports due to issues with readability, website navigation problems, and software downloads requirements. Possible improvements include: improving the technical knowledge of shareholders, placing Internet Financial Reports on the first level of the company website, and regularly testing Maltese Listed Entities’ Internet Financial Reports for accessibility. Implications: Since this research is the first to evaluate the perceptions of Maltese Shareholders towards Internet Financial Reporting, it enriches the current understanding of the topic within the local literature. Moreover, it is expected that this study will help identify improvements that can be made in order to improve the usability and understandability of Internet Financial Reports.