Highlights in annual reports: its perceived usefulness

Abstract

PurposeThis paper seeks to investigate whether the “financial highlights” section of annual reports of a sample of Indian companies satisfy the information requirements of investors.Design/methodology/approachThe research method involves the preparation of a check‐list from those items that have been suggested as significant to be disclosed in annual reports by both the “sophisticated” and “non‐sophisticated” investors as suggested in the study of Joshi and Abdulla. After the preparation of this check‐list, “financial highlights” section of a sample of companies listed on any of the Indian Stock Exchanges has been examined to investigate whether this section contains that information, which has been considered as significant by the investors, in the study by Joshi and Abdulla.FindingsMost of the companies do not disclose information items that are perceived by users of financial information in India as being significant under the “financial highlights” section.Research limitations/implicationsThe limitation of the current study rests on the fact that it uses Joshi and Abdulla for evaluating the “financial highlights” section and hence only considers the need of investors in annual reports and in this specific section. Second, the use of the survey result obtained by Joshi and Abdulla might not hold completely true at the present time due to difference in time period.Originality/valueThis is a pioneering study that questions whether the “financial highlights” section in annual reports provides those information items that are considered as “highlights” by investors.