For about twenty years, public companies have been using their websites for financial reporting purposes. Initially, they placed their financial statements and perhaps a few other elements of reporting on their sites. It was regarded as a very peripheral activity. The printed reports were the prime vehicle of financial reporting. In 1997, some companies did not put anything on their websites for financial reporting.
Since then, the use of websites for financial reporting purposes has increased dramatically. Now it is a major part of a company’s financial reporting activity; some say the main part.
The information presented on websites now includes not only the financial statements, but also everything that would be included in the annual report and in addition, some interactive elements like data banks and Excel financials. For several years, companies simply put on their websites the same information they out into their paper reports, thinking it would be used the same way.
But this thinking has changed. Most companies now recognize that the nature of the web as a medium of financial disclosure is very different from that of paper. Besides the ability of the web to present interactive material and multi-media, people use the web differently. Paper tends to be read sequentially. The web, decidedly not. Web users click on the information they want. They want it fast – within a click or two. No wading through tables of contents, indexes and menus. As a result, the companies realized that organization of the information and the ability to navigate it was of paramount importance.
Recently, there has been a move beyond websites into social media. Twitter is a favourite for providing quick items of disclosure. It is widely expected that this trend will grow. LinkedIn and YouTube are also often used to convey financial information. Often, you will see the YouTube videos on the websites as well.
The emergence of data analytics and big data has begun to have some influence on website disclosure. Already, companies are including data groupings as separate disclosures, complete, in some cases, with data analysis tools. This is a far cry from the days of rigid financial statements, opening the world of financial disclosure to user-created reports, wide ranging data analytics and increased user judgement in determining information relevance.
Website disclosure of financial information is changing the nature of financial reporting. This area will continue to evolve, probably quite quickly.