Correspondence: John A. Pendley, Business Administration Building 369, Huntsville, Alabama 35899, USA. E-mail: pendleyj@email.uah.edu

¹is an Associate Professor of Accounting and Information Systems at the University of Alabama in Huntsville. His research interests focus on value chain processes involving accounting information and how various participants in the value chain produce, alter, manipulate and, ultimately, utilize financial data.

²is an Assistant Professor and Jones Corporate Governance Faculty Fellow at Wichita State University. He obtained his doctorate degree from New York University's Stern School of Business, with specialization in accounting and finance. His research interests are financial reporting, its impact on valuation of firms, earnings manipulations and productive efficiencies of firms. His research has been published in such journals as Journal of Accounting and Economics, Financial Analysts Journal, Journal of Accounting Auditing and Finance, CFA Digest, Journal of Accounting Education, and Accounting & Finance.

Received 29 October 2008; Revised 29 October 2008; Published online 8 January 2009.

Abstract

In the late 1990s, a number of descriptive accounting studies examined the way firms use the Internet for financial reporting. Since the publication of these studies, there has been considerable advancement in Internet technologies that has altered the methods used to design and deploy Web sites. Given these advancements, the way firms use the Internet for financial reporting now may be different than that reported previously. We explore this possibility by examining the Web sites of a sample of US companies during the period 2006–2007. We do find a major structural change in the method used to deliver online financial reports. This change involves the increased use of third-party outsourcing services in the delivery of online financial information. Almost 59 per cent of firms engage in some form of outsourcing and nearly 41 per cent completely outsource their financial reporting site. Although the increased use of outsourcing may be a rational and expected way to provide online accounting data, outsourcing poses many unexplored ramifications for the accounting profession, including, the nature and quality of the data, regulation of online financial data and the role of emerging technologies, such as XBRL for business arrangements.