Companies Fail to Provide Basic Corporate Governance Info Online

The study of 250 U.S., Canadian, British and European public company Web sites found that:

Only 34% provide director bios
24% publish corporate governance policies
10% post insider trading reports
None identify audit committee experts
Large-cap U.S. and European companies lead improvements
U.S. mid- and small-caps lagging
Canadian, British companies trail

"It's clear from this survey that public companies need to do more to communicate the corporate governance and internal control changes they've been making in the wake of corporate scandals and new regulations. They may be making important improvements, but they're largely doing so behind closed doors and not keeping the investment public informed," said Blunn & Company's Dominic Jones, the study's author.

Jones said large-cap U.S. and European companies are the only bright spot in the survey. Many of these firms have been adding special corporate governance sections to their Web sites containing an array of corporate governance information. Putting corporate governance information in it own section makes it easier to find than forcing people to consult several documents in different sections of the website or in regulatory databases.

"We found that 44 percent of U.S. large-caps and 75 percent of big European companies have added corporate governance sections to their Web sites. For large-cap U.S. companies this is a big improvement from six months ago when an earlier study we did showed that only 10 percent of them had governance sections," he said.

However, U.S. mid- and small-cap companies are trailing far behind their bigger corporate cousins. Only eight percent of these companies in the study had separate corporate governance sections on their sites, six percent posted codes of conduct and eight percent published corporate governance guidelines online.

Canadian and British companies were also poor performers in the study. Ironically, both these countries have seen strong domestic lobbies against new U.S.-style governance regulations, including opposition from some regulators. Only 13 percent of Canadian and 20 percent of British firms in the study provided codes of ethics on their sites, while 17 percent of Canadian and 10 percent of British companies posted their corporate governance policies online.

However, Canadian companies (70%) were most likely to include their proxy statements on their Web sites, a traditional model of annual governance disclosure which reflects the fact that regulators there have moved much less than their U.S. and European counterparts to encourage companies to use the Internet to provide more current and regular communications with investors.

In the United States, for example, regulators will require all public companies with Web sites to post insider trading reports on their sites before July 30, 2003. However, even though the SEC has encouraged companies to do so ahead of that date, only 13 of U.S. large-cap and 8 percent of mid- and small-cap companies are doing so. German companies are required under that country's new corporate governance code to post details of insider reporting. We found that all German companies posted insider trading information prominently on their sites.

"The message from this seems to be that without regulatory action and mandatory requirements, companies are unlikely to make voluntary disclosures.' said Jones.

The Blunn & Company study surveyed the corporate Web sites of 250 public companies in several countries to assess the breadth of corporate governance information these firms disclose online. The survey was conducted from March 5 to March 26, 2003.

The study companies included 100 U.S. large-cap, 45 U.S. mid-cap, 35 U.S. small-cap, 30 Canadian large-cap, 20 British large-cap and 20 European (Germany, France, Switzerland, Sweden, Netherlands) large-cap companies.

A 15-page report on the survey is available for free downloading at Blunn & Company's website at: http://www.blunnco.com/about/perspectives/index1.htm.