Internet Column 3 : Investor Information On-line - the future of Corporate Reporting ?

Andy Lymer, The University of Birmingham,

The subject of on-line provision of company financial information has already taken up one of these columns this year. Column 1 was dedicated to the on-going EDGAR (Electronic Data Gathering and Retrieval) project of the SEC (see ACCOUNT Spring 1995). However, this area is moving forward so quickly it did not seem inappropriate to dedicate another, albeit more general, column to this subject.

The EDGAR project has been in the news again because the SEC have taken over direct responsibility for the provision on the Internet of company filings they received. As mentioned in column 1, the two year experimental project supported by the SEC, but actually run by Internet Multicasting Services and New York University, came to the end of its funding in September. There was significant debate and lobbying from various interested parties in the US about how, or even if, the project should be progressed. From the 'value-added' service providers there was clear, and understandable, pressure to encourage the SEC to consider using their not inappropriate experience in the area of commercial information provision and develop the project in their direction. However, the 'keep public information public and free' lobby won the day, and, at least for the time-being, a new home for EDGAR was created that is still on the Internet ( The SEC reported in making this announcement that the previous addresses for the database would continue to point to the developing system and would therefore continue to be valid points of entry to the database. The SEC also promised further development work on making their data sets more readily available and more 'user-friendly'. They have declared support for the project in this form into the future (see Steven Wallman's comments - an SEC commissioner - in Accounting Horizons, September 1995).

Alongside this action by the SEC has been a huge growth in the number of US based companies supplying financial information about themselves on the Internet. An excellent source of information on who is doing what in this area can be found at the National Corporate Services web pages ( where links into a number of lists of 'company information on-line' can be found. A particularly good list available from this site is that maintained by InvestorWeb ( categorise companies according to the amount of investor information they give on-line (though avoid declaring explicitly what they consider to be investor information and what they don't !). These lists are growing daily as companies come on-line.

A glance through this data will however, reveal very few companies reporting information under the UK's regulatory structure (take a look at the SUMMA pages for details on the few that do - Does this mean that the UK is trailing further and further behind developments in this area ? Fortunately not ! As reported in Accountancy Age on 28th September, Companies House are now seriously considering the advantages that could accrue to them by offering (or maybe requiring) companies to file their annual returns and other documents electronically in a way similar to the model the SEC is developing in the USA. Their considerations are just that at present - they haven't developed far enough yet even for Companies House to be prepred to issue a public statement describing what areas they might be considering ! However, this move indicates a serious intent by our primary financial information collecting agency to 'move with the times'.

Also in the last two months, the Inland Revenue have issued a second consultative document on their proposed introduction of the Electronic Lodgement System which is planned to coincide with the introduction of Self-Assessment in 1997. This document reports the successful completion of the pilot feasibility study and handles a number of practical problems that the study, and others comments, have generated.

Why is all this relevant to the subject of on-line corporate reporting ? Whilst not empirically proved as yet, it is fairly likely that the pre-emptive move by the SEC to encourage (require) electronic filings of accounting reports has encouraged companies to consider the production of their own investor information. The advantages of doing this from a company's perspective are clear. For example, they can make information widely available about their business at a low marginal cost and they can structure the information in a flexible way to allow mining from data provided to be governed by the information user not solely the information provider (as is obviously the case with standard reports). This flexibility opens up interesting possibilities in areas such as dynamic information provision (such as the use of video and audio alongside the conventional text based information), the advanced use of interactive feedback and in other areas such as timely reporting.

The advantages of on-line reporting from the users perspective follow on from this more open provision of information and the flexibility it offers to them to be selective in how and when they take information from businesses they are interested in.

If Companies House and the Inland Revenue make moves in the UK similar to those in the US then it is possible that companies reporting in the UK will follow the precedent set by their US based counterparts. They may well take more notice of how they can add their own value to the information that they are required to prepare and submit electronically. If this proves to be the case then a number of interesting issues for accountants and standard setters will arise: how, when and if this information should be independently assessed in an audit, to what standards should this information be produced, if any, can this process replace existing forms of statutory reporting over time, and so on. There are a number of issues here that need to be fllowed up with relevant research.

Time will tell whether or not Companies House will opt to make the information they collect available to all on-line as the SEC has done. It is likely that such issues as Crown Copyright, that currently restricts the possibilities of distributing UK legislation and other public documents electronically, will have to be dealy with before there would be significant pressure and precedent for this to be the case in the UK. The 'added value' lobby is also at least as strong in the UK as it is in the US. However, we can always live in hope !

This article appeared in ACCOUNT Vol. 7, No. 3 (Autumn 1995) p4-5

It is likely that some of the details given in the article will become dated over time.
Please notify the author ( if you spot any of these changes and he will update the information where appropriate.

This page was created and is maintained by its author - Andrew Lymer: University of Birmingham.

Last amended: November 1996