The Role of Foreign Shareholders in Online Financial Reporting: A Comparative Study of Malaysia and China

With the COVID-19 pandemic, using the Internet has become a must for businesses to communicate information to users. One of the main aims of online reporting is to serve users outside the geographic area. The purpose of this study is to empirically examine the association between foreign ownership and the extent of online financial reporting in two developing countries, i.e., Malaysia and China. Foreign ownership is the independent variable and the extent of online financial reporting is the dependent variable, with two control variables, i.e., web presentation and type of industry, which includes six industries, namely industrial products, plantation, property & construction, technology, trading & services, and consumer products. This study uses the agency theory and signaling theory to support hypotheses arguments and results. The sample size of this study consists of 300 companies (150 companies from each country) and the data is collected from the websites of the selected companies. OLS regression in STATA software is used to analyze the data. The findings show that companies in Malaysia do not connect their online financial reporting to foreign shareholders as much as companies in China. Interestingly, the results show that web presentation is significantly associated with the extent of online reporting in Malaysia and China. Industrial products, trading & services, and consumer product companies are positively associated with the extent of online reporting in China, but not strongly significant in Malaysia. The results help regulators and other related parties to enhance the level of transparency amongst listed companies in both countries.