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Managerial Finance Vol. 34 No. 12, 2008 pp. 848-867

MF # Emerald Group Publishing Limited
0307 -4358
34 , 12 DOI 10.1108/03074350810915815

The impact of corporate governance

on the timeliness of corporate internet
848 reporting by Egyptian listed companies
Amr Ezat and Ahmed El-Masry
Plymouth Business School, Plymouth, UK
Abstract
Purpose – This study seeks to examine the key factors that affect the timeliness of corporate internet
reporting (CIR) by the Egyptian listed corporations on the Cairo and Alexandria Stock Exchange.
Design/methodology/approach – The authors use firm characteristics and corporate governance
variables to investigate the influence on the timeliness of CIR. They also develop a disclosure index
to measure the timeliness of CIR for the listed Egyptian corporations.
Findings – The primary analysis finds a significant relationship between the timeliness of CIR and
firm size, type of industry, liquidity, ownership structure, board composition and board size. The
results indicate that firms typically in the service sector, that are large and have a high rate of
liquidity, a high proportion of independent directors, a large number of board directors and a high
free float disclose more timely information on their web sites. Furthermore, a significant association
between the entire independent variables and some items of timeliness of CIR is found.
Originality/value – This study is one of the first empirical studies to investigate the relationship
between the corporate governance and the timeliness of CIR in an emerging market.
Keywords Corporate governance, Egypt, Financial reporting, Stock exchanges, Online operations
Paper type Research paper

1. Introduction
Timeliness has long been recognised as one of the qualitative attributes of general
purpose financial reports (American Institute of Certified Public Accountants
( AICPA), 1973; Accounting Principles Board (APB), 1970; FASB, 1979). As the
purpose of corporate reporting is providing information that will aid the users in
decision making, timeliness become one of the most important characteristics of
financial accounting information for the accounting profession (Soltani, 2002).
Timeliness requires that information should be made available to financial statement
users as rapidly as possible (Carslaw and Kaplan, 1991) and it is a necessary condition
to be satisfied if financial statements are to be useful (Davies and Whittred, 1980, pp.
48-9). Empirical research on timeliness of financial reporting provides evidence that
the degree of timeliness of information release has information content (Beaver, 1968)
and affects firm value (Chambers and Penman, 1984 ; Givoly and Palmon, 1982;
Kross and Schroeder, 1984). Many regulatory agencies and listing authorities around
the world have issued requirements and recommendations regarding the timely
disclosure of financial information (Abdelsalam and Street, 2007). Consequently, the
usefulness of published corporate reports depends on their accuracy and their
timeliness for the different stakeholders. This is confirmed by FASB in which
defining the primary qualities that make accounting information useful, highlighted
 Impact of corporate governance
timeliness to be an Having information available to decision makers before it loses its capacity to influence
important factor decisions is an ancillary aspect of relevance. If information is not available when it is needed
defined as:
or becomes available so long after the reported events that it has no value for future action, it
lacks relevance and is of little or no use (FASB, 2000).
Therefore, the usefulness of the information disclosed in company annual reports will
decline as the time lag increases, and it has been argued by Abdulla (1996) that ‘‘the
longer the period between year end and publication of the annual report, the higher the
chances that the information will be leaked to some interested investors’’ (FASB,
2000).
In the same direction over the last years, the revolution in information technology 849 has paved the way
to discover new tools, which may assist in different aspects of life. One of the most
popular developments of the widespread use of information technology is the use of the internet in many
different aspects of life. Consequently, it is not surprising to find that most companies begin to benefit from
the widespread use of the internet in conveying useful information to their stakeholders within the suitable
time to increase the value of the information. According to Jones and Stanwick (2001) investors realise that
the value of financial information declines with time, which has the effect of shortening the reporting cycle
from annual or quarterly intervals to what is effectively real-time reporting. Therefore, the internet may serve
as an important tool to facilitate a better functioning of financial markets by enhancing companies’ ability to
provide investors with up-to-date, timely information (Abdelsalam and Street, 2007).
Many changes have happened in the Egyptian environment in the last few years.
Among them are: the moving toward extensive economic reforms by adopting the
privatisation policy of its public sector companies, issuing a package of laws and
regulations required for more stability in the Egyptian economy; such as Capital
Market Law No.95 of 1992 that was issued by the Capital Market Authority (CMA)
and the beginning of applying corporate governance rules to most listed corporations.
These changes have led to consequent changes in the Egyptian Stock Market which
has witnessed a massive increase in the volume of traded shares.
As a result of these changes, the clientele of Egyptian users of accounting
information and their needs will change. As a consequence, they should expect to
receive more timely, accurate and adequate information to aid them in making rational
decisions. This requires a change in the information which is disclosed in the
corporate annual report and its disclosed means. At the same time, the internet begins
to increase broadly in the Egyptian environment. Figure 1 illustrates the increased
usage of the internet in the Egyptian environment.
Based on these new requirements, the study seeks to examine the timeliness of the
disclosed information by the most active listed 50 Egyptian companies at the end of
2006. In addition, the study investigates the relationship between corporate
governance, firm
MF
34,12

Figure 1.
The developmentof
number of internet users
and internet service
providers in Egypt
between1997 and 2007
characteristics and the timeliness of corporate internet reporting (CIR). We find that
company size, liquidity, ownership structure, service activity, board composition and
board size are positively associated with CIR timeliness. However, no evidence was
found to support the association between CIR timeliness and the other variables: issue
of shares, leverage, profitability and role duality. Additional exploratory analysis
indicates that all the independent variables are associated with different timeliness
items.
850
thatTheaddressesremainderCIRoftimelinessthe paper
isandorganiseddiscussesasthefollows.hypothesesSectionof2 reviewsthe study.theSectionliterature3
outlines sample selection and the measurement of dependent and independent

variables. Section 4 presents the data analysis and discussion of the results. Finally
section 5 summarises the study and sets out the limitations and directions for future
research.

2. Literature review and hypotheses’ formulation

2.1 Literature review
Many studies investigate the potential effect of using the internet in disclosing
information on the corporate web site. Some of these studies are descriptive,
examining the extent of the web-site and the type of the information disclosed either
in one country or in more (Barac, 2004; Ettredge et al., 2001; FASB, 2000; Fisher et
al., 2000; Hedlin, 1999; Lybaert, 2002; Petravick and Gillet, 1998). The other type of
CIR studies are empirical, investigating the relationship between online disclosure and
its determinants (Ashbaugh et al., 1999; Bollen et al., 2006; Brennan and Hourigan,
2000; Debreceny et al., 2002; Debreceny and Rahman, 2005; Marston and Polei,
2004; Momany and Al-Shorman, 2006; Sriram and Laksmana, 2006; Trabelsi and
Labelle, 2006; Xiao et al., 2004).
Although many studies investigate the extent of CIR and its determinants, few
studies focus on the timeliness. Pirchegger and Wagenhofer (1999) analyse the use of
the internet to present financial information at the end of December 1997 and 1998 ,
respectively. The study used three samples: two of them are related to Austrian
 Impact of corporate governance
companies at the end of December 1997 and 1998, while the third one is related to
German DAX 30 companies at the end of 1998. To analyse the web sites, the study
demonstrates many criteria such as: content, timeliness, technology and user-support.
Five dimensions are used to measure the timeliness: updating the web site frequently,
distinguishing between current and past information, availability of daily stock
quotation, the response rate to a standard request and the response rate to a special
request. The study reveals that on average 66.3 per cent of both Austrian and German
companies disclosed timely information on their web sites.
Ettredge et al. (2002) investigate the speed with which accounting reports are
posted at corporate web sites of 50 random US companies at the end of June 1999.
The results indicate that on average there is a delay between the dates of filed annual
reports and the dates that they were disseminated on the web site. The study
differentiates between two groups of updating web sites: speedily and slowly updating
web sites. The study examines seven firm characteristics that explain the variation in
the time it takes firms to update their web site financial information. It concludes that
shorter delays are associated with greater profitability, shorter lags in announcing
earnings through press releases and the use of multiple file formats for form 10-K
presentation. On the other hand, longer delays are associated with external links to the
electronic data gathering, analysis and retrieval system which is required by the law to
file forms ( by US companies) with the Securities and Exchange Commission.
Lybaert (2002) reports on the extent to which the internet is used for financial
reporting in The Netherlands. The sample of his study consists of 188 Dutch
companies listed on the AEX in June 2000. The study uses four criteria to measure the
online disclosure, namely: content, timeliness, technology and user-support. Eight
dimensions were used to measure the timeliness of disclosed information. These
dimensions are: the date of the last update, the availability of current information, the
availability of a share quotation, the ability to update a quotation during the day, the
response rate for a standard request, the time used to mail annual reports, the response
rate for an especial request and the day of this response. The highly disclosed items
are: the response to a standard request (76 per cent), the response to an especial
request 851

(43 per cent), and finding current information (42 per cent).
Davey and Homkajohn (2004) review the extent and quality of internet financial
reporting among the top 40 Thai listed companies. The study depends on four
categories to measure the extent and quality of internet financial reporting, namely:
content, timeliness, technology and user-support. The timeliness category is classified
into four dimensions: press release existence, unedited latest quarterly results, stock
quotation and vision/forward-looking statements. They demonstrate that the most
frequent item of disclosure on corporate web sites was press release (89 per cent). It
found that the categories of disclosure relating to user-support and content scored
higher than timeliness and technology on the Thai companies’ web sites.
Barac (2004) examines the use of internet reporting in South Africa. The sample
consists of the 94 largest South African companies ranked by turnover size in June
2002. The study relies on only three items to examine the timeliness of the web sites.
These items are: current press releases (92 per cent), share price information (77 per
MF
34,12
cent) and real-time or 20-min share prices (75 per cent). The most recent study
conducted by Abdelsalam and Street (2007) examines the timeliness of CIR by 115
UK companies listed on the London Stock Exchange based on market capitalisation.
The study illustrates that timely CIR is significantly related to board experience, board
independence, audit fees and the number of analysts. Finally, the study recommends
that UK listed companies need to focus on improving the timeliness dimensions of
their CIR.

2.2 Hypotheses formulation

This paper examines the timeliness of disclosed information on the web sites of the 50
most active listed Egyptian companies on the Egyptian stock market at the end of
2006 (see Appendix). Moreover, the study investigates the relationship between
timeliness and both the corporate governance attributes and firm characteristics,
which are related to the timeliness of internet reporting in particular and the online
disclosure in general. Consequently, the study classifies the variables into two groups:
firm characteristics and corporate governance.
2.2.1 Firm characteristics. This category contains six variables namely: size, type of
business, profitability, leverage, liquidity and issue of shares. The discussion of these
variables and the related hypotheses are as follows:
Size. Size represents one of the most common variables in determining the extent of
disclosure. There are a lot of studies that investigate the relationship between size and
voluntary disclosure in general (Ahmed and Nicholls, 1994; Cooke, 1991, 1993;
Haniffa and Cooke, 2002; Hossain et al., 1994; Malone et al., 1993; Raffournier,
1995; Karim et al., 2006). This relationship can be interpreted according to the stock
market pressure that force the large companies – which look forward to increasing
their outside capital to enhance their performance – to disclose more information on
their web sites to assist them in the marketability of securities and to achieve their
objectives. Therefore, large companies may be more able to access financial markets
if they disclosed more information online (Bonso´n and Escobar, 2002). Many of the
empirical studies investigate the relationship between the size of the companies and
online disclosure and they found that size has a significant relationship with the online
disclosure (Ashbaugh et al., 1999 ; Bollen et al., 2006; Bonso´n and Escobar, 2002;
Brennan and Hourigan, 2000; Craven and Marston, 1999; Debreceny et al., 2002;
Ettredge et al., 2002; Garcı´a-Borbolla et al., 2005 ;
Ismail, 2002; Larra´n and Giner, 2002; Marston and Polei, 2004; Momany and Al-
Shorman,
852 2006; Oyelere et al., 2003; Pirchegger and Wagenhofer, 1999; Sriram and Laksmana, 2006 ;
Xiao et al., 2004). Therefore, based on these arguments, the first hypothesis is:
H1. There is a significant relationship between company size and CIR timeliness.
Type of business activity. There are two general types of business activity: first is
industrial activity and the second is non-industrial (service) activity. Many empirical
studies use the type of business activity in explaining the relationship with online
 Impact of corporate governance
disclosure. The results are mixed. Some studies show that there is a significant
relationship between online disclosure and type of business activity (Ashbaugh et al.,
1999; Bonso´n and Escobar, 2002 ; Brennan and Hourigan, 2000; Craven and
Marston, 1999; Garcı´a-Borbolla et al., 2005 ; Ismail, 2002; Oyelere et al., 2003),
while the others show the insignificant relationship (Debreceny and Rahman, 2005;
Larra´n and Giner, 2002; Trabelsi and Labelle, 2006). Based on the majority view, the
second hypothesis can be stated as follows:
H2. There is a significant relationship between type of business activity and CIR
timeliness.
Profitability. Many empirical studies denote profitability as an important factor that
may affect the disclosure levels. There are many reasons for the importance of
studying the relationship between profitability and online disclosure. According to
agency theory, managers of the highly profitable companies are prone to disseminate
more information on the web site of the company to achieve personal advantages such
as the continuance of their positions and compensation justification (Haniffa and
Cooke, 2002; Wallace et al., 1994). Many studies conclude that profitability has a
non-significant relationship with online disclosure (Larra´n and Giner, 2002; Marston
and Polei, 2004; Momany and Al-Shorman, 2006; Oyelere et al., 2003; Xiao et al.,
2004). Correspondingly, other studies show a significant relationship (Ashbaugh et
al., 1999; Debreceny and Rahman, 2005 ; Ismail, 2002). Consistent with the latter, the
third hypothesis can be stated as follows:
H3. There is a significant relationship between profitability and CIR timeliness.
Leverage. Leverage (gearing) refers to the use of the finance resources such as debt
and borrowed funds to increase the return on equity. So, highly leverage companies
will be responsible for satisfying the creditors’ need by disseminating reliable
information on the web site to make these creditors more confident about the ability
of the companies to pay their debts. Similarly, both the shareholders and creditors
would demand more information to assess the firm’s financial ability (Ismail, 2002;
Larra´n and Giner, 2002 ; Oyelere et al., 2003; Xiao et al., 2004). Empirical studies
which investigate the relationship between leverage and online disclosure are
inconclusive. Some studies show a significant relationship (Ismail, 2002; Momany
and Al-Shorman, 2006; Xiao et al., 2004), while others show an insignificant
relationship (Bollen et al., 2006; Brennan and Hourigan, 2000; Debreceny et al.,
2002; Larra´n and Giner, 2002; Oyelere et al., 2003). Depending on the above debate,
the fourth hypothesis is:
H4. There is a significant relationship between leverage and CIR timeliness.
Liquidity. Liquidity refers to the ability of companies to convert their assets into cash
with minimum loss of value. Wallace and Naser (1995) stated that ‘‘The ability of a
firm to meet its short-term financial obligations without having to liquidate its long-
term assets or cease operations is an important factor in the evaluation of the firm by
interested parties such as investors, lenders and regulatory authorities’’. Although the
importance of a liquidity variable in the disclosure issue is recognised, there are few
MF
34,12
studies examining the relationship between liquidity and online disclosure (Momany 853 and Al-Shorman,
2006; Oyelere et al., 2003). According to this, the fifth hypothesis is stated as follows:
H5. There is a significant relationship between liquidity and CIR timeliness.
The issuance of share. Most companies seek to increase their capital by more than one
resource, and one of these resources is issuing more shares. Companies, which need
new financing, will seek to disclose more information on their web sites to attract
more investors and increase their confidence about the position of the companies,
which may encourage those investors to invest in them. There are many studies which
investigate the relationship between the issuance of shares and disclosure in general
(Gibbins et al., 1990 cited by Frankel et al., 1995; Lang and Lundholm, 1993; Sriram
and Laksmana, 2006). In addition, there are many studies which show a significant
relationship between this variable and online disclosure (Ettredge et al., 2002; Sriram
and Laksmana, 2006; Xiao et al., 2004). Depending on the above debate, we can
formulate the sixth hypothesis as follows:
H6. There is a significant relationship between the issuance of shares and CIR timeliness.
2.2.2 Corporate governance. Corporate governance searches for more accuracy of
disclosed information and organises the relationship between the shareholders, board
of directors and management. Many variables related to corporate governance are
investigated in previous studies. Most of these studies try to investigate the
relationship between these variables and company performance and company value,
while few studies examine the relationship with disclosure. In terms of online
disclosure there are few studies investigating the relationship between corporate
governance variables and online disclosure. This study seeks to examine this
relationship as a need for greater transparency in the Egyptian market and to illustrate
the influence of corporate governance on the existence of web sites for the Egyptian
listed corporations as required by the CMA. The variables, which will be used in this
study, are as follows:
Ownership structure. In term of equity’s scope, there are two clusters: either the
concentration or the dispersion of the ownership. Concentration of ownership refers to
the group who has the most influence among the equity owners, while dispersion
(diffusion) of ownership looks only at the separation of ownership between managers
and equity owners as a group (Haniffa and Cooke, 2002). Companies whose
ownership structure is diffuse (widely held companies) tend to disclose more
information on their web sites to supply the shareholders with necessary information,
while closely-held companies (with a concentrated ownership structure) tend to
disclose less information on their web sites because their shareholders can access the
required information and obtain it internally (Marston and Polei, 2004). The results of
ownership structure are mixed; some studies show no significant relationship between
this variable and online disclosure (Abdelsalam and Street, 2007; Trabelsi and
Labelle, 2006), while others prove a significant relationship (Debreceny and Rahman,
2005; Marston and Polei, 2004; Momany and Al-Shorman, 2006; Oyelere et al.,
2003). According to the latter, the seventh hypothesis is:
 Impact of corporate governance
H7. There is a significant relationship between ownership structure and CIR
timeliness.

854 Board composition. Board composition is identified as ‘‘the proportion of outside directors to the total

number of directors’’ (Haniffa and Cooke, 2002) and also is known as independent
directors. So, this variable determines the proportion of executive directors (inside the
company), who generally work in the company and the nonexecutive directors
(outside the companies), who do not work in the company. The results of previous
studies which have examined the relationship between board composition and
disclosure are mixed. Studies show a significant relationship which is either positive
(such as Abdelsalam and Street (2007), Adams et al. (1998) and Chen and Jaggi
(2000)), or negative (such as Eng and Mak (2003)), while Haniffa and Cooke (2002)
and Ho and Wong (2001) did not find any significant relationship. Consequently, this
study investigates the relationship between ownership structure and online disclosure.
The eighth hypothesis is as follows:
H8. There is a significant relationship between board composition and CIR
timeliness.
Role duality. Role duality occurs between the CEO (chief executive officer) and the
chair when one of them holds the two positions at the same time. In other words, this
is when the CEO is also the chair of the board. The CEO is a full-time position and is
responsible for the daily management of the company as well as setting and
implementing company strategies. However, the position of the chair is usually
parttime and the main responsibility is to ensure the effectiveness of the board (Weir
and Laing, 2001). The results of previous studies are mixed. Some studies found that
role duality is associated significantly with a lower level of voluntary disclosure (Gul
and Leung, 2004; Haniffa and Cooke, 2002) and less timely CIR (Abdelsalam and
Street, 2007), while others found an insignificant relationship (Ghazali and Weetman,
2006). The contradictory nature of these results supports the need to examine the
relationship between role duality and CIR timeliness. So, the ninth hypothesis is:
H9. There is a significant relationship between role duality and CIR timeliness.
The size of the board of directors. The number of directors on the company’s board
should play a critical role in monitoring of the board and in taking strategic decisions.
Some studies argue that a large board assists in: performing more monitoring,
providing companies with the diversity that help them in providing critical resources
and eliminate environmental uncertainties, alleviating the dominance of the CEO, and
increasing the pool of expertise that yields from the diversity of the board (Singh et
al., 2004; Yermack, 1996). Other studies illustrate that a large board could cause more
conflict between the members of the board that may delay critical decisions or cancel
them. In addition, a large board causes poorer communication and processing of
information (Huther, 1997; John and Senbet, 1998). Depending on the above
argument, it is expected to find a relationship between the size of the directors’ board
and the online disclosure, as a result of the diversity of the board’s membership and
their desire to disclose more information on their company’s web site to attract more
MF
34,12
investors and satisfy the shareholders’ needs. Consequently, the larger the number of
the board’s directors, the greater the desire for online disclosure. The tenth hypothesis,
which is derived from this point, is:
H10. There is a significant relationship between the size of the board of directors and
CIR timeliness.

3. Methodology
3.1 Sample and data 855
The study examines web sites of the most active 50 Egyptian listed companies on the
Cairo and Alexandria Stock Exchange (CASE) at the end of 2006. The companies were sorted by market
capitalisation and were visited in December 2006. After excluding the companies which did not have a web
site, the rest was 37 companies.
The study takes a snapshot in December 2006 to investigate the web sites of the
sampled companies. The CIR timeliness was measured by designing a checklist that
contains 11 items. Each company was examined and takes one if one of the timeliness
items was found on its web site or takes 0 if any of the timeliness items was not found
on its web site or if the company did not have web site[1]. Following Barac (2004) ,
Davey and Homkajohn (2004), and Pirchegger and Wagenhofer (1999), the criteria
that determine CIR timeliness are as follows:
.
current press releases or news;
.
current share price;
.
calendar for future financial events;
.
pages indicate the latest update;
.
monthly or weekly sales or operating data;
.
market share of key products;
.
the date of the last web site update; and
.
option to register for future e-mail alerts regarding press releases or newsletters.

3.2. Main model

The data on the chosen independent variables (see below) were obtained from Egypt
Information Dissemination Company (EGID) and from the Disclosure Book issued by
CASE in July 2007. The following multiple-regression model is proposed:

TIDIi ¼0 þ1 Size þ2 Type þ3 Prof þ4 Lev þ5 Liq þ6 Issue þ7 Owner þ8 B Comp þ9

Duality þ10 B Size þ"

where:
.
TIDI: CIR timeliness index;
 Impact of corporate governance
.
i: number of indices of CIR timeliness;
.
0 is the intercept;
.
Size: denotes to company size and is measured by the natural logarithm of market
capitalisation at December 2006 ;
.
Type: is a dummy variable for type of business and it is ‘‘1’’ if the company is industrial
and ‘‘0’’ if the company is a service;
.
Prof: denotes to profitability and is measured by the ratio of net profit to total
equity ( ROE);
.
Lev: denotes to leverage and is measured by the ratio of liabilities to total
equity;
.
Liq: denotes to liquidity and is measured by the ratio of current assets to current
liabilities;
856 .
Issue: denotes to issue of shares and it is ‘‘1’’ if the company issues shares during
2006, ‘‘0’’ if not;
.
Owner: denotes to ownership structure and is measured by per cent free
float;
.
B Comp: denotes to board composition and is measured by the number of
non-executives members to total members on the board of directors;
.
Duality: denotes to role duality and it is ‘‘1’’ if the chairman is the same as the
CEO, ‘‘0’’ if not;
.
B Size: denotes to board size and is measured by the number of board of
directors; and
.
": the error term.

4. Data analysis and results

4.1 Descriptive statistics
By checking the web sites of the sampled companies, the results that are shown in
Table I demonstrate that the current share price is the most disclosed item on the
Egyptian companies’ web sites (67.6 per cent). This reflects the importance of this
item according to the companies, and their desire to disseminate this item to different
stakeholders to support them in making rational decisions. The register for future e-
mail, regarding press releases and newsletters, was found in 64.9 per cent of the
sampled companies, which means that the companies prefer to update the
stockholders with their news regularly to provide greater transparency. Regarding the
current dividends’ announcements and the most recent interim financial reports, it can
be noticed that these two items were less frequently disclosed on the Egyptian
companies’ web sites.

Table I. Items Number of companies (%)

Timeliness items’ disclosing items
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34,12
Current share price 25 67.6
Option to register for future e-mail 24 64.9
alerts regarding press releases or
newsletters Link to the regulatory news 22 59.5
service 21 56.8
Calendar for future financial events 13 35.1
Monthly or weekly sales or operating data 12 32.4
11 29.7
Market share of key products
21.6
Pages indicate the latest update 8
21.6
Current press releases or news 8 19.4
The date of the last web site update 7
18.9
Current dividends announcements 7
listed
The most recent interim financial reports
items on the web sites of the
Note: This table presents the disclosure of the Egyptian
disclosure timeliness companies at the end of December 2006
Due to the potential importance of these two items to the different stakeholders, the
Egyptian companies should concentrate more in disclosing these items to keep the
stakeholders updated with the most recent information that may affect their
investments in these companies or at least keep their company loyalty. As mentioned
before, the data of independent variables were obtained from EGID and from the
Disclosure Book issued by CASE. Table II presents a descriptive analysis of
independent variables.
From Table II, it can be shown that 18 (47.3 per cent) of the sampled companies have 857
issued shares to increase their capital at the time of the study. Moreover, the majority of
the sampled companies (64.9 per cent) have role duality on their boards while (35.1 per
cent) of the sampled companies separate between the chairman and the CEO. Most of the sampled companies
are industrial (56.8 per cent) while the services companies constitute a majority (43.2 per cent) of the sampled
companies. Furthermore, the average profitability of the companies that have web sites is 20 per cent which
demonstrates a decrease in the profitability rate for the sampled companies. The average liquidity of the
sampled companies is also declining (1.6) while the average leverage (1.2) is, to some extent satisfactory. In
addition, the average percentage of the companies’ free floats is slightly low (36 per cent), which shows that
the average sampled companies prefer to hold high percentages of the shares from traded them in the market.
Finally, the average of the non-executives to the total number of the board members is (77 per cent) which
indicates that most of the members in the sampled companies are independent.
Normality tests were performed using skewness/kurtosis tests (not presented to
save space but available from authors upon request). The leverage, liquidity, size of
board and board composition do not have a normal distribution. Therefore, following
Abdelsalam and Street (2007), Lang and Lundholm (1993) and Wallace and Naser
(1995), all the non-normality variables were transformed into ranks before running the

No. (% )

Panel A: dummy variables 18 47.3 Mean Table II.

52.7
 Impact of corporate governance
Issue
Yes
No
19
Type
Industry 21
Services 56.8
16 43.2
Role duality
Yes 24
No 64.9
13 35.1
Panel B: other independent variables: Minimum Maximum
Size 5.500 8.020 6.631
ROE 0.473 0.939 0.201
Leverage 0.002 4.430 1.160
Liquidity 0.217 6.071 1.637
B Size 5.000 24.000 11.650
B Com 0.200 0.944 0.773
Owner 0.054 0.879 0.360

Notes: Size, company size; Type, type of business; ROE, profitability; Lev, leverage; Liq, liquidity;
Issue, issue of shares; Owner, ownership structure; B Comp, board composition; Duality, role Descriptive analysis for
duality; and B Size, board size independent variables

regression model. Also, before running the regression model the multi-collinearity
problem was checked by producing a correlation matrix. Table III summarises the
correlation matrix between the independent variables.
From Table III, it can also be noted that there is no serious multi-collinearity
between the independent variables. The rule of thumb for checking problems of
multicollinearity is when the correlation coefficient is > 0.800 (Gujarati, 2003).
858
4.2 Multiple-regression results
The results of the primary regression models are shown in Table IV. The model is
significant at p ¼ 0.0001 with adjusted R2¼ 0.55 and F-ratio ¼ 6.05. Our findings
support the hypotheses H1, H2, H5, H7, H8 and H10.
H1. predicts an association between firm size and timeliness of disclosed
information on the Egyptian companies’ web sites. We find a positive
relationship. This finding is consistent with most of the previous studies that
revealed that large companies tend to have web sites and disclose more
information on these web

Table III. (B) (C) (D) (E) (F) (G) (H) (I) (J)
MF
34,12
0.077 0.175 0.135 0.002 0.149 0.123 0.296 0.116
0.272 0.005 0.161 0.184 0.160 0.121 0.084 0.015
(A) 0.090
0.146 0.206 0.022 0.082 0.061 0.073 0.027
(B) (C)
0.040 0.169 0.072 0.174 0.452 0.258
(D) (E) (F)
0.003 0.081 0.628 0.106 0.242
(G)
0.722 0.142 0.127 0.054
(H)
0.038 0.088 0.026
(I)
0.062 0.119
0.034
Notes: A, Type;
B, r; C,D, Size; and J,
Correlation matrix of Duality B. Com; Lev; G,iq; H, Sard; I,
Owne Issue; E, F, Bo
independent variables L Prof ;

Coefficient T statistic

1.692 3.812*
Constant Type
0.115 1.730**
Issue
0.006 0.093
Size
0.280 4.727*
B Com 0.005 1.695**
Lev 0.004 1.163
LIQ 0.005
1.724**
B Size Prof 0.006
0.025 2.004**
Table IV. OLS Duality
0.058 0.155
results of the Owner
association 0.407 0.807
F-ratio
between corporate 6.05* 2.521***
Adjusted R2***
governance, firm 54.85 %
characteristics and
Notes: *, ** and *** indicate significant at the
CIR timeliness 1, 10 and 5 per cent, respectively
sites (Ashbaugh et al., 1999; Bollen et al., 2006; Brennan and Hourigan,
2000; Craven and Marston, 1999; Marston and Polei, 2004; Momany and Al-
Shorman, 2006; Oyelere et al., 2003; Xiao et al., 2004). Regarding H2 which
predicts a significant relationship between the type of industry and CIR
timeliness, the results found that service companies disclose more timely
information on their web sites than industrial companies. This result is
compatible with Adams et al. (1998) and Craven and Marston (1999). H5
predicts an association between the
859
liquidity of the companies and the CIR timeliness. We found a positive
significant relationship. This means that companies, which are relatively cashrich, are more likely to
disclosed timely information on their web sites to benefit from the internet in reflecting the solvency
of the companies to different stakeholders. This result is in line with Oyelere et al. (2003) who found
that liquidity is an incentive to companies to engage in online disclosure.
 Impact of corporate governance
H7. predicts a significant relationship between ownership structure and CIR
timeliness. The study found a positive significant relationship. This indicates
that the diffusion of the ownership structure encourages the companies to
disclose more timely information on their web sites to reach their more
widely disperse owners and therefore to reduce the owners’ information
costs in addition to support them in monitoring management behaviour. Our
finding is consistent with Marston and Polei (2004), Momany and Al-
Shorman (2006) and Oyelere et al. (2003) who found a positive relationship
between the ownership diffusion and online disclosure.
H8. expects a significant relationship between board composition and CIR
timeliness.
The study found a positive significant relationship. This indicates that a
higher proportion of independent directors encourage the companies to
disclose timely information on their web sites. This is consistent with Adams
et al. (1998), and Chen and Jaggi (2000), who found that a higher proportion
of independent directors is associated with more comprehensive financial
disclosure. Therefore, a large proportion of independent directors leads to
better monitoring and control of the action of executive directors and
safeguarding the interest of different investors, who need more timely and
accurate information that will be provided by the management through
timely disclosure. Finally, H10 predicts a significant relationship between the
size of the board and CIR timeliness. The results indicate that there is a
positive relationship. The greater the number on the board of directors, the
better the timeliness disclosure on the Egyptian companies’ web sites.
Consequently, a large number of members on the board of directors enhances
the position of a wide range of information between the members and also of
different points of view, which aid in sharing the different knowledge and
experiences between the members. This can increase the possibility of
disclosing more information on the companies’ web sites. This result is
consistent with Abdel-Fattah (2007) who establishes that the larger the size
of the board the more likely the voluntary disclosure. This study found no
support for a significant relationship between profitability (H3), leverage
(H4) , issue of shares (H6) and role duality (H9).
In order to provide more evidence, the study conducts further analysis by using a
logistic regression analysis to determine the relationship between the different 11
timeliness items and other variables of the study. We run 11 logistic models; each
model consists of one dependent variable (which is coded ‘‘1’’ if the timeliness item
is disclosed and ‘‘0’’ if the item is not disclosed) and the same independent variables.
We find eight models are significant at (p < 0.01, 0.05); the other three models are
not significant and are not reported. For each model, the significance of the overall p
value and the adjusted R2 is shown in Table V.
The models which are significant are: current press releases or news (T1), current
MF
34,12
860 share price (T2), calendar for future financial events (T3), pages indicate the latest
update (T4), the date of the last web site update (T7), option to register for future e-
mail alerts (T8), link to the regulatory news service (T9) and the most recent interim financial reports (T10). A
summary of the variables that affect the timeliness of the disclosed information on the companies’ web sites is
shown in Table VI.
From the above table, it can be noticed that the further logistic analysis, using the
log of the odds ratio for different dependent variables, reveals some significant
relationships. These dependent variables are: issue of shares, board composition,

Model Adjusted R2

T1 0.453*
T2 0.999**
T3 0.658**
T4 0.591**
T5 0.298
T6 0.262
T7 0.684**
T8 0.358***
T9 0.532**
T10 0.607** T11 0.316

Table V. Notes: *, **and *** indicate significant at the 5, 1 and 10 per cent, respectively. T1, current press
Logistic results of the releases or news; T2, current share price; T3, calendar for future financial events; T4, pages indicate
association between the latest update; T5, monthly or weekly sales or operating data; T6, market share of key products;
corporate governance, T7, the date of the last web site update; T8, option to register for future e-mail alerts; T9, link to the
firm characteristics and regulatory news service; T10, and the most recent interim financial reports; T11, current dividends
CIR timeliness items announcements

Table VI.
A summary of the
significant models Model A B C D E F G H I J

T1 2.30* T2 50.90** 9.40** 21.70** 0.69* 3.60* 1.00** 28.10*

30.0** 36.80** 22.6** 18.50** 0.93** * 0.25*** 2.90*
T3 6.90** 7.88** 0.44* 0.19* 1.57** 12.80* 18.6**
T4 51.70*** 4.80* 1.40** *
T7 7.90*** 8.04** 0.20* 15.2**
T8 0.63* 0.21*
T9 2.70* 11.90*** 4.99** *
T10 3.10* cent respectively. A, Type; B,
*** indicate ant at the 10, 1 Prof and J, Duality. T1-T10: see
Notes: *, ** and signific Lev; G, Liq; H, S
Owner; C, Issue; Size; E, B. Com; F, and 5
D, per
 Impact of corporate governance
Board;
Table V
I,
leverage, profitability and role duality. According to the issue of shares, it was found
that it had a negative significant relationship with two models: T) and T3. This was an
unexpected result but it was consistent with Xiao et al. (2004), who found that issuing
shares may lead companies to reduce the amount of the disclosed information on the
web site and consequently the timeliness of this disclosure.
Board composition has a significant negative relationship with both T3 and T7. This
result is also unexpected but it is in line with Eng and Mak (2003), who found that
independent directors decrease the level of the companies’ disclosure. The results show 861

that the increased number of independent directors will delay the updating of the
companies’ web sites, and hinder disclosing future financial events. Leverage has a
positive significant association with T2, T3, T4 and T7. This result is consistent with
Ismail (2002), Momany and Al-Shorman (2006), and Xiao et al. (2004). Therefore,
the companies with higher leverage tend to disclose their current share price to their
stakeholders to reflect their ability to pay their debts. Also, these companies provide a
calendar for future financial events, update their pages on the internet and show the
date of the last update to keep their stakeholders updated with the suitable information
that supports them in making their decisions.
Profitability has a positive significant relationship with T3 and T). This result is
similar to Debreceny and Rahman (2005), and Ismail (2002). Companies with high
profitability will encourage providing a calendar for the future financial events to
reflect their good situation to different stakeholders. This will lead them to be more
sensitive to update their web site. Finally, role duality has a negative significant
relationship with T4, T7 and T9. This is in line with Abdelsalam and Street (2007),
Gul and Leung (2004) and Haniffa and Cooke (2002), who found that duality is
associated with lower voluntary disclosure.
The logistic analysis model also confirms the same results about the other five variables
which we obtain from the multiple-regression models.

5. Conclusion, limitation and future research

Over the last years, there has been growing research on using the internet as a means
of disseminating financial information. Most of these studies are descriptive and are
mainly concerned with the state of art of online disclosure. This study takes a different
side. It investigates the key factors that affect the CIR timeliness as one of the items of
the online disclosure. These factors include: the firm characteristic variables that are
previously studied in the voluntary disclosure studies, and the corporate governance
variables as they represent a new trend in the Egyptian environment. To the best of the
authors’ knowledge, there are no previous studies in the Egyptian environment
investigate the relationship between corporate governance and online disclosure
namely CIR timeliness. Consequently, the contributions of this paper are twofold.
First, it investigates the CIR timeliness items that become important items to the
different stakeholders to make a rationale decision. Second, it examines the
relationship between corporate governance and CIR timeliness to discover the
MF
34,12
potential effect of the application of corporate governance in the Egyptian
environment on CIR timeliness. Few studies have been conducted in the last few years
to examine the relationship between corporate governance and online disclosure in
many different countries. This study takes the same direction for the Egyptian stock
market that represents an emerging capital market.
The study performs two regression models: multiple regression and logistic regression. First,
according to the multiple-regression model, the study found that company size, liquidity,
ownership structure, service activity type, board composition and board size are positively
significant and associated with CIR timeliness. Second, according to logistic regression, the
study found that the entire variables are significantly associated with different timeliness items.
According to current press releases or news (T1), only type of business is negatively associated
with it. Current share price (T2) is associated negatively with type of business and issue of share,
while 862 it is associated positively with the size of company and its leverage.
As to the calendar for future financial events (T3), type of business, liquidity, issue of
shares and board composition are negatively related to this item. Meanwhile, size of
the company, profitability, leverage, ownership structure and board size are positively
related to this item. That the pages indicate the latest update (T4) is negatively
associated with role duality and positively associated with the size of the company,
leverage and board size. The date of the last web site update (T7) is associated
negatively with the type of business, liquidity, board composition and role duality,
while associated positively with the size of the company, profitability, leverage,
ownership structure and board size. The option to register for future e-mail alerts item
(T8) is associated positively with only one variable: ownership structure. The link to
the regulatory news service (T9) is associated negatively with two variables: type of
business and role duality. Finally, the most recent interim financial reports item (T10)
is associated negatively with type of business and liquidity, while associated
positively with size of the company and ownership structure.
The importance of the study is derived from the need to benefit from the unique
characteristics of the internet in disseminating timely information of the corporation
on their web sites. This is expected to add value to both researchers and practitioners
in Egypt. For researchers, this study extends the previous studies in the disclosure area
by examining the using of the internet in disseminating timely information on the
Egyptian companies’ web sites which addresses a crucial need in the Egyptian
environment at the current time. For practitioners, the results of this study are
concerned with one of the most critical investment activities in Egypt, namely, the
Egyptian Stock Exchange which becomes one of the most important emerging
markets in the Middle East that begins to attract more foreign investments. So, the
result of this study is expected to add value to those who invest in the Egyptian Stock
Exchange by obtaining timely and accurate information about the listed companies
from their web sites which may help them in making rational decisions.
In evaluating the results, some limitations should be considered. The sample of the
study is slightly small as the study depends on the most 50 active companies in the
Egyptian Stock Market. Future researches may extend this sample. Also, the index of
the CIR timeliness is measured depending on the un-weighted checklist that examined
the web site of the Egyptian listed companies at a single point in time (December
 Impact of corporate governance
2006). Future research may take two points of time to make a comparison between
them and evaluate the timeliness of information disclosure on the companies’ web
site. Finally, the study concentrates on only one side of online disclosure (timeliness)
that has other two sides: content and presentation. Future research may examine these
other sides to give a whole picture for online disclosure.

Note
1. The study employs un-weighted disclosure items’ checklist to avoid a subjective view.
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Appendix. The most active listed companies used in the study and their web sites

Market Cap
Company Web site (LE 000)
MF
34,12
Alexandria Mineral Oils Company www.amocalex.com 6,853,560
Alexandria Spinning & Weaving www.spinalex.com/spinalex/home.htm 766,460
( SPINALEX )
Bisco Misr www.biscomisr.com 319,585
Commercial International Bank (Egypt) www.cibeg.com www.eab-
online.com www.deltasugar.com 17,193,150
Credit Agricole Egypt www.easternegypt.com 7,760,480
Delta Sugar www.mobinil.com.eg 3,233,764
Eastern Tobacco 10,558,250
Egyptian Company For Mobile Services www.sfie.com.eg www.efg- 20,200,000
( MobiNil ) hermes.com
Egyptian Financial & Industrial 1,930,657
Egyptian Financial Group-Hermes www.sahlhasheesh.com
23,248,568
www.eipico.com.eg
Holding Company
Egyptian For Tourism Resorts 7,056,000
www.empc.com.eg www.esf-
Egyptian International Pharmaceuticals 2,221,419
bank.com www.adi-alahly.com
( EIPICO )
www.ezzindustries.com 2,205,126
Egyptian Media Production City
www.kabo.com.eg 1,413,571
Egyptian Saudi Finance Bank
www.elshams.com 348,400
El Ahli Investment And Development
www.alwatany.net 10,704,363
El Ezz Steel Rebars
www.elsewedycables.com 663,681
El Nasr Clothes & Textiles (Kabo)
El Shams Housing And Urbanization www.edbebank.com 503,200
El Watany Bank Of Egypt www.heliopoliscompany.com 4,928,250
EL Swedy Cables www.hdb-egy.com 13,996,800
Export Development Bank www.mnhd.net 2,796,800
Heliopolis Housing www.qenacement.com 8,155,590
Housing & Development Bank www.mci-egypt.com 2,361,700
Madinet Nasr Housing www.nbdegypt.com 5,279,200
Misr Cement (Qena) 2,326,800
www.nsgb.com.eg
Misr Chemical Industries 506,560
National Development Bank 536,495
National Societe General Bank (NSGB) 12,098,362
Table AI. (continued)

Market Cap
Company Web site (LE 000)

Olympic Group Financial Investments www.olympicgroup.com 4,290,012

Orascom Construction Industries (OCI) www.orascomci.com 105,064,096
Orascom Hotels And Development www.orascomhd.com 16,729,410
Orascom Telecom Holding (OT) www.orascomtelecom.com 96,323,296
Oriental Weavers www.orientalsgroup.com 2,964,603 867
Raya Holding For Technology And www.rayacorp.com 752,199
Communication
 Impact of corporate governance
Sidi Kerir Petrochemicals www.sidpec.com 10,521,000
Six of October Development & www.sodic.com.eg 6,383,236
Investment ( SODIC )
Telecom Egypt www.telecomegypt.com 34,875,472

About the authors

Amr Ezat is a PhD candidate at Plymouth Business School, UK. His research interests are digital auditing, corporate
governance and CIR.
Dr Ahmed El-Masry is a senior lecturer in finance at Plymouth Business School, UK. His research interests are:
exchange rate risk, capital structure, credit ratings, dividend policy, and corporate governance. His papers appear in
Managerial Finance, Journal of Operational Research Society, Expert Systems with Application and Global Review of
Economics and Finance Research. He is Editor-in-Chief of Journal of International Business and Finance. Ahmed El-
Masry can be contacted at: ahmed.el-masry@plymouth.ac.uk

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