Exploring the use and users of narrative reporting in the online annual report

N. Rowbottom, A. Lymer, Richard Slack
2010 Journal of Applied Accounting Research  
This paper explores the use and users of narrative reporting information contained within the corporate annual reports published online by large listed companies on the London Stock Exchange. Broadly, the study was motivated by the increasing supply of narrative reporting information and management commentary in annual reports, and the lack of empirical research investigating the use and users of this information. More specifically, there has been little investigation into who uses information
more » ... elivered online, and how the users and the information they request may differ from those using hard copy annual reports, particularly where many commentators believe the Internet will become the primary channel for disseminating annual reports in the future. The paper details over 1 million instances where narrative reporting and annual reporting information is successfully delivered to users of the corporate Web sites of 15 UK FTSE 350 companies representing 11 industrial sectors. The most frequent users of the online annual report are private individuals and those registered under ISP, employees and professional investors and creditors. Employees are found to make significantly greater use of narrative reporting information, yet they do not make comparatively greater use of management commentary, suggesting that their focus is aimed at less technical, more summarised information. Consultants and unaffiliated organisations make significantly greater use of narrative reporting information and management commentary, suggesting an interest in understanding the business while lacking an interest in, or comprehension of, financial accounting data. Professional investors and creditors, and accounting firms make significantly fewer requests for both narrative reporting information and management commentary. Overall, the key financial statements, notes and segmental analysis generate the most information requests and summarised, narrative reporting information tends to be more popular with online users than management commentary or more detailed narratives. The results suggest that those with greater experience and expertise in preparing and using financial accounts adopt different information preferences with respect to the online annual report. Although experienced users such as professional investors, creditors and accounting firms use the annual report to download predominantly detailed financial accounting data, the widespread availability and accessibility of the online annual report allows narratives to provide a source of general company information for employees and a wider audience, many of whom would have lacked access to a hard copy annual report.
doi:10.1108/09675421011069487 fatcat:zbkqqwp33zejjcdulx4qal4ycu