The paper attempts to investigate the current state of Internet Financial Reporting (IFR) practices of listed companies on Karachi Stock Exchange (KSE), Pakistan, after the recent regulatory notification [SRO 25(1)/2012] issued by the Securities and Exchange Commission of Pakistan (SECP) in the financial reporting environment. The authors surveyed a randomly selected sample of 50 companies listed on KSE to ascertain whether the recent regulatory changes have had a significant impact with respect to the financial reporting on their website. Content analysis approach is applied to study the IFR practices using the modified version of the IFR index of Davey and Homkajohn (2004). It is observed that the listed companies, on an average, report 47% significant portion of financial information on their websites. They provide the financial information on the Internet as a complement to their traditional paperbased reports. The amount and quality of IFR practices differ widely and only a few companies are using the technology offered by the Internet. IFR categories of content and user support scores are higher than that of timeliness and technology for websites of the Pakistani listed companies. The research findings are essential as they assist in informing the regulators about the IFR practices of listed companies which satisfy national and international investors’ demand for updated/online information.

The Internet has attained a broad communication reach in the present sphere of globalized finances and can be a significant tool to structure shareholders’ value. Several studies (Seetharaman and Subramaniam, 2005-2006; Kelton and Yang, 2008; Garg and Verma, 2010; Sanchez et al., 2011; and Khan and Ismail, 2012) have argued that the instantaneous, extensive and low-cost communication of financial and non-financial information to investors in flexible formats is made possible through a distinctive information disclosure tool, the Internet. The Internet has a broad coverage, easy access to real-time information and open space for information. Bonson and Escober (2006) argued that a company can make a large volume of information available on its websites which enables the users to access details in the particular area of their interest. Further, Gandia (2008) opined that the Internet offers benefits in circulating and sharing corporate information in a cost-cutting and speedy manner. Al Arussi et al. (2009) argued that the management can lessen the agency problem and improve information asymmetry through the use of their website for information dissemination.

Internet Financial Reporting (IFR), which makes investors aware about the company worldwide, is playing an important role in the market in the present scenario (Abdelsalam and Street, 2007; and Al Arussi et al., 2009). IFR has been reasonably accepted as a tool to communicate with stakeholders in the current time. The financial information of the firms can be easily accessed through the use of the Internet. This provides an equal access to the potential users and leads to democratization of capital markets. It decreases the information unevenness among the institutional investors and others. So, research on its growth is important as well as relevant.

Corporate Governance Journal, Corporate Financial Reporting, Karachi Stock Exchange (KSE), Securities and Exchange Commission of Pakistan (SECP), Internet Financial Reporting (IFR), Internet, Websites, Listed Companies, Pakistan.