ABSTRACT
Web disclosure, the voluntary disclosure of financial and performance information on an organization’s own public website, is increasingly becoming the standard through which organizations achieve digital informative transparency and accountability. Extant research on web disclosure has implicitly referred to signals such as efficiency, effectiveness, credibility, and accountability without applying signaling theory. Drawing on signaling theory, this research develops an incentive-signaling model of web disclosure to better explain the differential implementation of web disclosure among nonprofit organizations. We then test our model using a regression analysis of Charity Navigator’s financial and web disclosure information for 3,353 nonprofit organizations. The results revealed that organizations that are younger, smaller, those with a higher percentage of expenses for programs, and those with lower leverage are more likely to disclose their IRS form 990 and audited financial statements on their website. This paper extends current research on web disclosure by explicitly incorporating signaling theory. In addition, our model highlights financial information that mangers should disclose in order to signal organizational efficiency. We conclude with implications for research and practice.
Keywords
Web disclosure, Financial Web Disclosure, Signaling Theory, Donations