This document summarizes research on understanding investor needs and preferences for corporate reporting. It finds that while annual reports remain important, investors want more timely information from a broader range of sources. They also want reporting to be less complex and provide clearer communication on risks. There is strong support for integrated reporting that combines financial and non-financial data. However, electronic reporting standards like XBRL have met challenges in being widely adopted. Overall, investors emphasize the need for clarity, transparency and engaging more with regulatory bodies to improve corporate reporting.

1. Understanding investors:
Directions for corporate
reporting (ACCA research)
By: Nino Bazhunaishvili

2. Content
 Foreword
 Executive summary
 A broader range of information sources
 The pressure for speed
 The need for improvement
 Future trends in reporting
 Conclusion
 References

3. Foreword
Over the four stages, the project examines:
• recent developments in the investor landscape, trends and
emerging issues since the global financial crisis
• the kind of information investors need to make their
decisions, how they now like to receive that information
(both the format and the communications channel), and
their level of trust in what they receive
• the move towards ‘real-time’ reporting, and how
companies are responding to calls to disclose certain
information with much more immediacy, rather than at the
end of a quarter or year
• how companies are already changing their investor
engagement and reporting activities to reflect evolving
investor demands, and what this means for the finance
function and the CFO.

4. Executive summary
 ABOUT THE RESEARCH
This report, which was written by Longitude Research
on behalf of ACCA, is based on a survey of 300 investors,
conducted in March 2013, and a program of in-depth
interviews with leading figures from the investment
community.
 Half the survey respondents represent institutions with
more than US$500m in assets under management. There
was a good spread across sectors: 38% represented
pension funds, 30% insurance companies, 10% private .
 Respondents were based in the UK (80%) and in Ireland
(20%),

5. Executive summery
In-depth interviewees:
• Tim Barker, head of credit research, Old Mutual Asset
Managers
• David Blood, founder, Generation Investment Management,
leading sustainability investors
• Jon Exley, partner, Investment Advisory Practice, KPMG
• Chris Higson, associate professor of accounting practice,
London Business School
• Guy Jubb, global head of governance and stewardship,
Standard Life Investments
• John Kay, FT journalist, visiting professor of economics at
the London School of Economics, chair of the Kay Report
• Samantha McConnell, chief investment officer, IFG
Pensions, Investments and Advisory Services, Ireland

6. 1. A broader range of information sources
“For now, the annual report remains the primary input for
making investment decisions.”
63%
36%
35%
35%
27%
23%
20%
6%
0% 50% 100%
Annual Report
Quarterly earnings reports
One-to-one conversations
Investment advisers
Analyst presentations/reports
Media coverage and…
Interim report
Investor roadshows
Figure 1.1: Which of the following sources of information are most valuable for
you as an input for decisions about investing in a company?

7. “ Investors are also relatively traditional in their preferred
formats. “
53.5%
44.5%
38.5%
38.5%
17.6%
8.6%
0.0% 20.0% 40.0% 60.0%
Online static reports
Printed reports
Interactive online reports
Live presentations
Webcasts
XBRL
Figure 1.2: In which of the following formats would you most like to receive information
from a company?
1. A broader range of information sources

8. 63% of investors say they place greater value on information
or commentary generated outside the company rather than
as part of corporate reporting.
‘Investors value a wide range of information sources, first
and second-hand, to help them develop a richer
understanding of the business’,
1. A broader range of information sources

9. 2. The pressure for speed
Only 51% of investors are satisfied with the timeliness of
company information.
 In addition to wanting more information to guide their
decisions, investors increasingly want it more quickly.
 The result is that investors now have access to information
on a much timelier basis than ever before.

10. Figure 2.1: How satisfied are you with the following aspects of the information
that companies provide as it relates to your investment decision-making?
5
4
2
2
5
2
3
4
12
11
12
14
8
13
15
13
25
27
30
30
35
33
31
33
33
35
39
38
38
40
34
38
25
23
17
16
14
12
17
12
Transparency
Level of assurance and reliability
Useability
Relevance of information
Overall quality
Suitability of formats
Timeliness
Level of detail
Very Dissatisfied Quite dissatisfied Neither
dissatiafied nor
satisfied
Quit satisfied Very Satisfied

11. Almost half the investors believe that mandatory
quarterly reporting should be abandoned.
 ‘A large majority of respondents, whether they
represented companies or investors, considered that
quarterly reporting and interim management
statements fell into the category of useless or
misleading information’,
2. The pressure for speed

12. • This is not to say, however, that all investors have such a
long-term focus. Momentum and high-frequency traders will
inevitably base their models on short-term information and,
for them, the quicker information can be released, the better.
• ‘No business should be managed on the basis of what it’s
going to do over the next three months
• Three-quarters of investors say that despite its flaws, the
quarterly report remains a valuable tool for investment
decision making .
• Among 41% of investors is for companies to release audited
financial statements on a quarterly basis
2. The pressure for speed

13. • A key challenge with this time lag is that other, unaudited,
sources of information become available, which means that
information in quarterly reports will already have been priced
in by the time they are released. ‘Certainly you do need
assurance that the figures you are getting are correct’,
• There are cost implications, too.

14. 3. The need for improvement
A key problem is complexity – almost two-thirds of
respondents think that corporate reporting is now too
complex
Investors’ confidence in company reporting has fallen and
scepticism has risen since the global financial crisis.
‘ What was different about the global financial crisis was that
it was unprecedented both in severity and speed, and also
the fact that it hit everything at once; the greater the crisis,
the greater the subsequent increase in investor scepticism.’

15. 50.0%
46.0%
45.0%
37.0%
36.0%
34.0%
32.0%
30.0%
20.0%
21.0%
0.0% 20.0% 40.0% 60.0%
Cash flow statement
Balance sheet
Income statement
Reporting of key performance…
Business unit reporting
Sustainability and environmental…
Corporate governance information
Key risks and opportunities
Narrative reporting
Regional reporting
Figure 3.1: In which of the following areas do you think the annual report needs greatest improvement?
3. The need for improvement

16. MORE COMMUNICATION ON RISK
38.0%
37.0%
36.0%
29.0%
27.0%
19.0%
18.0%
18.0%
16.0%
14.0%
12.0%
11.0%
0.0% 10.0% 20.0% 30.0% 40.0%
Key risks to the business
Key growth opportunities
Longer-term expectations for the…
Changes to competitive environment
Drivers of future performance
Drivers of past performance
Reporting on business unit…
Sustainability
Corporate governance information
Reporting on regional performance
People and talent issues
Regulatory environment
Figure 3.2: Which of the following types of information do you think are most important to include in the
narrative reporting section of an annual report, in terms of aiding your investment decisions?

17. ‘The auditor has an increasingly important role in providing more
general assurance to shareholders.’
There is a trade-off between speed and assurance of information

18. Figure 3.3: For each of the following types of reporting information from
companies, would you prioritize speed or assurance?
25
19
19
24
30
33
8
12
12
13
13
9
20
23
27
22
20
19
20
21
22
18
17
17
28
26
20
24
21
22
0 20 40 60 80 100 120
Profit warning
Emerging opportunities
Covenant breaches
Emerging risks
Liquidity
General finacial information
strong performance for assuarence
Slight performance for assuerance
no performance
slight performance for speed
strong performanceform speed

19. 4. Future trends in reporting
There is strong support among investors in the UK and Ireland
for integrated reporting.
42.0%
51.0%
5.0%
29.0%
0.0% 20.0% 40.0% 60.0%
Very valuable
Quite valuable
Not that valuable
Not at all valuable
Figure 4.1: How valuable do you think it would be for companies to combine
financial and non-financial information into an integrated reporting model?

20. ‘Extensible Business Reporting Language (XBRL)
is fast becoming a global standard for the sharing
of financial data.

21. XBRL: THE CHALLENGE OF ELECTRONIC DATA
24.0%
21.0%
40.0%
15.0%
0.0% 20.0% 40.0% 60.0%
Currently using and find it valuable
Currently using but do not find it
valuable
Not yet using but would find it
valuable
Not yet using and do not intend to
Figure 4.4: Which of the following statements best describes your current use and
opinion of XBRL?

22. Conclusion
Clarity and transparency matter. More than two out of three
investors said they would apply a bigger discount to a
company if its corporate reporting lacked clarity.
Investors need to engage more with the regulatory and
standard-setting processes.

23. References
 ACCA (2012), Re-assessing the Value of Corporate Reporting,
<http://www. accaglobal.com/content/dam/acca/ global/PDF-
technical/financial-reporting/reassessing-value.pdf>, accessed 8
May 2013.
 BIS (Department for Business, Innovation and Skills) (2012), The
Kay Review of UK Equity Markets and Long-term Decision
Making: Interim Report, <https://www.gov.uk/
government/uploads/system/uploads/
attachmentdata/file/31685/12-631-kay-review-of-equity-markets-
interim-report.pdf>, accessed 8 May 2013.
 CFA Institute (2006), Breaking the Short-Term Cycle, <http://www.
corporate-ethics.org/pdf/Short-termism_Report.pdf>, accessed 8
May 2013. .

24. • Do you have
any questions?