Improving the value of annual report disclosure (DISCLOSURE)

Abstract:

The annual report is the main authoritative document for communication of companies’ business activities, status and performance to stakeholders (Johansen et al. 2013). The purpose of annual report disclosures is to provide additional description of the items presented in the primary financial statements and of unrecognised relevant items. This is provided to reduce information asymmetry between management and providers of capital. New disclosure requirements have over the years been added to accounting standards, which seemingly should increase transparency and reduce information asymmetry between management andexternal stakeholders. However, there is currently uncertainty about the usefulness of annual reports and disclosures in particular (FRC 2009, FRC 2011). Due to the increase in disclosure requirements, annual reports have increased in volume and complexity. The objective of this project is to contribute towards a solution of this.