39% of the Companies Consider Annual Reports to be Excessively Detailed

Recently a research was conducted by ICSA: The Governance Institute and recruitment specialist The Core Partnership, which brought to light the fact that many companies were indecisive about whether the amount of information conveyed in the annual reports of the companies was appropriate or not.

As per the research, 39% of the companies regarded the contents of the annual reports to be excessive and astonishingly similar to a number of companies while on the other hand 38% considered the information in annual reports to be of appropriate amount. 23% of the companies were unsure about the said matter.

The companies which found the annual reports to be too detailed were of the view that conveying information to the shareholders through annual reports had become out dated. The companies considered that the stakeholders should be informed on a day-to-day basis.

Furthermore, the companies also accused the regulators to be unaware with the current business scenario and have formulated regulations that have become a cause of many problems for the companies.

The companies in favor of the current annual report format were of the view that annual reports are the sole means of informing the stakeholders that are not involved in the operations of the company about the company’s financial situation along with a detailed analysis of the various aspects of the company’s financials in its annual financial statements that are issued with the annual report.

These companies also consider that these annual reports are a vital source of informing the potential investors and stakeholders about the company’s financial aspects, its culture, its nature of business and its future prospects without any inference from any of the company’s marketing department with the information coming straight from the horse’s mouth.

Research director at ICSA, Peter Swabey said that the main concern is the amount of time, effort, money and resources that is used in formulating such information that is of use to a limited number of people. It will be more appropriate if the company distinguishes between the information that is to be conveyed online and the information that is to be reported in such reports.