Corporate reporting: Too much information or too little?

By Mark Vaessen, Global IFRS Leader

The length of a public company’s annual report has grown remorselessly over the past 10 years. In the U.K. and the U.S., the average number of pages is well over 100. Is the higher level of disclosure shining more light on a company’s affairs?

 

Opinion in the business community is divided. In a new publication on the future of corporate reporting, we interviewed ten international leaders in the field, from heads of standard-setting organizations to investors and preparers. Most of them agreed that there was too much information and that it was poorly put together.  And a couple of preparers said that the ever-rising volume of corporate reporting is compliance-driven.

 

Every new IASB standard requires more disclosure than its predecessor. It’s usually easier for a preparer to adopt a checklist approach to disclosure rather than evaluate the materiality of each disclosure, they say.

 
But not every interviewee said that corporate reporting suffered from information overload. Some investors say that it is not necessarily the volume of information, but the lack of a comprehensive story, which is where improvements in financial reporting are needed. Corporate reports must do a better job of connecting the dots, they say.

 

All the interviewees agreed that the key point was to organize corporate reports better so that users would find them easier to understand and preparers would be able to do a better job of weighing risk and opportunity. Both sides of the argument make some good points. What is needed now is a wide-ranging debate about what is wrong with corporate reporting and how to fix it. Where do you stand on the issue: too much corporate information or too little?

 

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