Concise corporate reporting: communication or symbolism?

Purpose – Corporate reporting is an important component of the investor relations function, and the aim of this paper is to seek evidence as to whether, as is often assumed, concise financial reports result in clearer communication between the company and its report users. If concise reports are genuinely being prepared in an attempt to improve the clarity of communication with stakeholders, it is to be expected that other disclosures in the annual reports in which they are disseminated should similarly reflect strategies that are consistent with enhancing the user-friendliness of communication. Design/methodology/approach – Characteristics of the chairperson’s annual report letter and graph use in annual reports containing a concise financial report were compared to those in traditional full reports of listed Australian companies. Findings – Consistent with the argument that adoption of concise reporting is more symbolic than instrumental, the results show no differences in the letters’ complexity or in graph use across the two report types. Practical implications – If concise reporters genuinely wish to improve the clarity of their communications, greater attention needs to be paid to how information is presented in their broader annual report. Originality/value – This study is the first to attempt a systematic analysis of the rationale that seems to underpin adoption of concise reporting – that of improved communicative clarity. It casts doubt as to whether preparers are acting in accordance with this rationale.