Title: The effect of earnings quality on internet financial reporting in developing countries from different perspectives: the case of Jordan

Authors: Mohammed M. Yassin; Yazid K. Melhem; Dea'a Al-Deen Al-Sraheen

Addresses: Al-Zaytoonah University of Jordan, P.O. Box 130, Amman 11733, Jordan ' Al-Zaytoonah University of Jordan, P.O. Box 130, Amman 11733, Jordan ' Al Al-Bayt University, P.O. Box 130040, Mafraq 25113, Jordan

Abstract: Internet Financial Reporting (IFR) is a voluntary disclosure tool that mitigates the agency problem, which causes information asymmetry. This study aimed to investigate the effect of earnings quality (EQ) on IFR. It employed four different measures to measure EQ, and developed an IFR index to measure the content and format of firms' disclosures. Data of 226 Jordanian firms listed on the Amman Stock Exchange (ASE) were collected. The univariate analysis reveals that IFR firms are larger, more leveraged, less board independent and have higher EQ than non-IFR firms do. Ordinary least squares (OLS) regression analysis supports that management may use greater voluntary disclosures when current earnings are less informative. Potential simultaneity bias between EQ and IFR was expected to be present. To control for this endogeneity problem, extended two-stage least squares (2SLS) regression analysis was used and supports that good EQ could facilitate foreign investments through disclosing transparent information via IFR. The results are expected to help regulators and policy makers in establishing the building blocks of a conceptual framework for IFR.

Keywords: internet financial reporting; IFR; earnings quality; agency theory; voluntary disclosure; Jordan.

DOI: 10.1504/IJBIS.2025.144383

International Journal of Business Information Systems, 2025 Vol.48 No.2, pp.137 - 166

Received: 10 Mar 2021
Accepted: 17 Jun 2021
Published online: 11 Feb 2025 *

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