tions of the company’s annual report, it is only the
shareholder information, not surprisingly, that is read to any significant
degree by the respondents. This section of the report contained extensive
information regarding share price
history, current dividends and details of
listings on overseas stock exchanges, in addition to details of the Annual
General Meeting and a financial calendar. Other sections, including in-
formation on board and corporate matters, are largely ignored, so too are
the additional financial data and information on the company’s subsidiaries
and associated undertakings.
The findings, therefore, suggest that much of the annual report is largely
ignored by shareholders, or at best, is read only briefly. The relatively low
readership of much of the annual report may be a reflection of the passive
nature of many private shareholders and their lack of interest in much of
the detailed disclosure. Summary financial data appear to be preferred,
which could imply that either the primary statements are too complex for
the majority of private shareholders, or only a small amount of financial
data is relevant to them. Shareholders’ preference for the narrative sections
of the report may favour the former explanation. The importance share-
holders place on the various sections of the annual report appears to be
closely associated with the extent of reading of the particular section of thethe corporate report and the private shareholder 255
report [respondents were asked to rate importance on a scale of 1 (very
important) to 5 (not at all important)]. Table 2 does not give comparisons
with the mean scores in the L&T studies, since these used a 7-point scale
to rate importance; however, overall, their findings are not dissimilar to
ours.
Further analysis of the data was undertaken in order to determine whether
any of the background variables relating to the profile of the respondents
had an impact on the readership of the various sections of the annual report.
Rather than examine each individual part of the annual report, the sections
were grouped as follows: the first category contained the financial state-
ments—profit and loss account, balance sheet, cash flow statement, state-
ment of total recognized gains and losses, and the notes to the accounts; the
second comprised those sections concerned broadly with governance—the
corporate governance section, the directors’ statement of responsibility, the
auditors’ report and the board and corporate matters section; the third
category included the narrative sections—chairman’s statement, the chief
executive’s review, the review of operations and the financial review; finally,
the remaining sections—financial summary, additional financial information,
shareholder information and subsidiary information were combined as a
miscellaneous category. Mann–Whitney U tests and Kruskal–Wallis H tests
were employed to ascertain whether relationships existed between certain
background characteristics (identified above) and the degree to which each
category of information was read.
The tests reveal that the male respondents appear to read each section
of the annual report more thoroughly than their female counterparts; all
diVerences are signi&
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