PhD Proposal

The effect of Internet Financial Reporting on Decreasing Information Asymmetry and Increasing The efficiency of Capital Market .

1- Introduction
The capital market has an effective and important role in achieving the economic development. Moreover , information especially accounting information has a vital role in this market because it enables the investors to expect their returns on investments and determine the degree of risks associated with these investments , the matter which easily determine the accurate prices of shares . Providing relevant accounting information helps in increasing the market volume, reducing the costs of operation and increasing the number of investors in capital market. All these things will be reflected in increasing the return from operations and achieving the economic development. We can indicate this in the following figure

Accounting %isclosure

%ecreasing The &ncertainty in 'apital Market (ncrease The 'apital Market )olume

,perations Processing

*haring in +isks

-fficient Allocation of +esources

Achieving The -conomic %evelopment

!igure"#$ The relationship between accounting disclosure and capital market.

(nformation Asymmetry is a case in which the internal users of information "the management and the owners$ have much amount of information about the business and its operations than the external users such as investors ,creditors, market analysts ,tax authorities.. etc. (nformation Asymmetry is considered a problem to the extent that creates tangible information risks. These information risks make the users of information ask for compensation and this will increase the cost of capital. 'onse/uently, decreasing information asymmetry will decrease information risks and the cost of capital. We can indicate this in the following figure.
(nformation1Asymmetry %efensive 4ehavior by Parties "&sers$ Who lack (nformation "-xternal users$

*top to Purchase *hares "*tocks$

Prohibiting The Managers from %ealing with The *hares "*tocks$

-stablishing a 3ong Term Portfolio

2egative -ffects on 'apital Market

The 3ack of *hares 3i/uidity

The (ncrease in operations 'ost

%ecrease in The 2umber of 'urrent *hares

The %ecrease in The )olume of Transaction

!igure"0$The Effect of Information Asymmetry on Capital Market As a result of the development in information technology and the means of communications , the internet has become a uni/ue information disclosure tool , in that it encourages flexible forms of presentation and allows immediate ,broad and inexpensive communication to investors. (nternet financial reporting "(!+$ provides companies with more flexibility

as to the type of information disclosed and the format of web disclosures, as compared to traditional paper1 based disclosure .(!+ allows companies to disseminate information to a broader audiences on a more timely basis and permits the distribution of alternative types of disclosure at one location. The content of (!+ may include annual and 5 or /uarterly reports , stock price data, press releases, analyst reports and management discussions of operations, so all these things will lead to decrease information asymmetry and decrease the cost of capital and increase the efficiency of capital market . 2-Research Problem: This study aims to find answers for the following /uestions 1 #1 %oes information asymmetry affect the efficiency of capital market 6 01 %oes the internet financial reporting eliminate information asymmetry 6 71 Are there professional standards that control internet financial reporting 6 81 (f there are standards , to what extent do the organi9ations follow these standards 6 :1 Are all the contents of internet financial reporting relevant to investors 6 ;1 What is the role of auditors to assure that all the contents of internet financial reporting were audited 6 3-Research Importance :The importance of the study is related to the economic conditions of the -gyptian economy and its urgent need for an efficient capital market "especially with the general trends toward privati9ation and attract foreign investments $ .The efficiency of capital market can not be achieved without providing investors with all the relevant information they wanted .(n addition , the need of the -gyptian capital market to increase the concern about accounting disclosure and the necessity of issuing accounting standards that obligate the companies to achieve information < symmetry, which increases the efficiency of capital market. %ate *ignature ?ead of %epartment Prof ,sman Mohammed @assen %ean of !aculty Prof ,sman Mohammed @assen 5 50==>