Prioritising Disclosures in the Annual Report

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

Resumé

Drawing upon information economics, this paper presents a relative assessment of 24 of the most common disclosure items in the management commentary and notes sections of the annual report. We design and conduct an Internet survey using a large representative sample of users with an investment focus (n = 288) and preparers of annual reports (n = 89). Using cost-effectiveness analysis, an evaluation method widely used in healthcare economics, the balance between preparation costs and user satisfaction, relative to user demand is assessed. Our main findings show that corporate social responsibility and corporate governance, the least demanded disclosure items in the management commentary, are also costly items to prepare. Further, preparers do not consider indirect costs (i.e. competitive position costs and potential litigation costs) of information provided in the management commentary to be a major concern. With regard to the notes, we find that business combinations (IFRS 3), financial instruments (IFRS 7) and impairment tests (IAS 36) are highly demanded but are also among the items most costly to prepare, and users are less satisfied with these notes. The findings have important implications for practitioners and policy-makers and can be used for setting priorities.
OriginalsprogEngelsk
TidsskriftAccounting and Business Research
Vol/bind43
Udgave nummer6
Sider (fra-til)605-635
ISSN0001-4788
DOI
StatusUdgivet - 2013

Emneord

  • Annual report
  • Cost-effectiveness analysis
  • Disclosure
  • Management commentary
  • IFRS
  • Notes

Citer dette

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Prioritising Disclosures in the Annual Report. / Riise Johansen, Thomas; Plenborg, Thomas.

I: Accounting and Business Research, Bind 43, Nr. 6, 2013, s. 605-635.

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

TY - JOUR

T1 - Prioritising Disclosures in the Annual Report

AU - Riise Johansen, Thomas

AU - Plenborg, Thomas

PY - 2013

Y1 - 2013

N2 - Drawing upon information economics, this paper presents a relative assessment of 24 of the most common disclosure items in the management commentary and notes sections of the annual report. We design and conduct an Internet survey using a large representative sample of users with an investment focus (n = 288) and preparers of annual reports (n = 89). Using cost-effectiveness analysis, an evaluation method widely used in healthcare economics, the balance between preparation costs and user satisfaction, relative to user demand is assessed. Our main findings show that corporate social responsibility and corporate governance, the least demanded disclosure items in the management commentary, are also costly items to prepare. Further, preparers do not consider indirect costs (i.e. competitive position costs and potential litigation costs) of information provided in the management commentary to be a major concern. With regard to the notes, we find that business combinations (IFRS 3), financial instruments (IFRS 7) and impairment tests (IAS 36) are highly demanded but are also among the items most costly to prepare, and users are less satisfied with these notes. The findings have important implications for practitioners and policy-makers and can be used for setting priorities.

AB - Drawing upon information economics, this paper presents a relative assessment of 24 of the most common disclosure items in the management commentary and notes sections of the annual report. We design and conduct an Internet survey using a large representative sample of users with an investment focus (n = 288) and preparers of annual reports (n = 89). Using cost-effectiveness analysis, an evaluation method widely used in healthcare economics, the balance between preparation costs and user satisfaction, relative to user demand is assessed. Our main findings show that corporate social responsibility and corporate governance, the least demanded disclosure items in the management commentary, are also costly items to prepare. Further, preparers do not consider indirect costs (i.e. competitive position costs and potential litigation costs) of information provided in the management commentary to be a major concern. With regard to the notes, we find that business combinations (IFRS 3), financial instruments (IFRS 7) and impairment tests (IAS 36) are highly demanded but are also among the items most costly to prepare, and users are less satisfied with these notes. The findings have important implications for practitioners and policy-makers and can be used for setting priorities.

KW - Annual report

KW - Cost-effectiveness analysis

KW - Disclosure

KW - Management commentary

KW - IFRS

KW - Notes

U2 - 10.1080/00014788.2013.827105

DO - 10.1080/00014788.2013.827105

M3 - Journal article

VL - 43

SP - 605

EP - 635

JO - Accounting and Business Research

JF - Accounting and Business Research

SN - 0001-4788

IS - 6

ER -