Corporate Dialogue in the Digital Age

Management

Further details

This paper suggests our present system of corporate reporting must change radically to meet the challenges of the digital economy. Information technology is transforming the relationship between companies and their stakeholders. The paper argues that a new form of multi-directional corporate dialogue is needed to replace traditional financial reporting models.

A number of leading companies have put their annual reports on the Internet but using this technology is about much more than delivering existing information on the Web; it is also about what information is delivered, to whom and when. For example, corporations will find it technically and economically feasible to provide much more detailed and useful financial and non-financial information about topics such as products, human resources and environmental policies. More than this, they will be able to get an immediate response from investors, customers, suppliers and employees which will enable them to tailor their products and services and gain loyalty through involvement.

Moving towards real-time reporting and assurance services On-line, real-time reporting will blur the distinction between current financial information used by management and the historic audited information made available to the public. Whilst issues of confidentiality, competitiveness and, crucially, verification remain to be addressed, it is probable that they will only slow rather than halt progress towards real-time reporting and assurance services.

Framework to facilitate information comparison essential. For meaningful digital dialogue to take place, corporate data needs to utilise an architecture (a system of electronic data formatting known as the object-oriented approach) that helps stakeholders use a new type of software known as intelligent agents to access, compare and manipulate that data. Any progress in the area of electronic corporate reporting must be based on the development of an internationally agreed set of parameters defining this digital infrastructure. A significant effort is therefore needed on standards to ensure corporate information is digitally tagged in a consistent and unambiguous way.