Research Reveals how Investors and Analysts Utilize ‘Extra Financial’ Information

A recently released report-The value of extra-financial disclosure, explores how analyst and investor source, utilize and further get affected by the ‘extra financial information’ that consists of Social, Governance and Environmental information as well as other information that is not related to finance in any which way. The research report was prepared after consulting few analysts and investors and it revealed that for many analysts and investors, the extra or additional finance related information is useful and relevant. Many of them also pointed out that the information is important for making investment related decisions and analysis.

The report which was prepared for the Prince’s Accounting for Sustainability Project and the Global Reporting Initiative by Radley Yeldar included the viewpoints of a small number of analysts and investors. However, it is still considered important and useful for the analyst and investor sentiment as far as extra financial disclosure is concerned

According to the survey, more than eighty per cent of the respondents are of the opinion that addition or extra finance related information is relevant for making decisions and for the purpose of analyzing as well. It also pointed out that analysts and investors utilize a number of sources to collect important financial as well as additional finance related information. However, they very strongly prefer sources that are more specialized and comprehensive. They also prefer sources that allow them to directly connect with the representatives of the board and reporting channels that are more formal like the annual report, sustainability and integrated reports.

More than eighty per cent of the analysts and investors were of the opinion that a reporting style, which is more integrated, will offer advantages to their company related assessments and analysis. These analysts and investors saw integrated style of reporting as valuable and very appropriate for enhancing the accessibility, reliability, comparability and relevance of additional finance related information and for enhancing the assessments of a company so that it performs well in future.

On the other hand, the survey also revealed that many of the respondents were not aware of eXtensible Business Reporting Language (XBRL). Only around ten per cent of analysts and investors stated that they utilize XBRL and it influences the manner in which they get finance related information.