Preparers' perceptions of corporate reporting and disclosures

Abstract

This paper reports a study of the perceptions of preparers of corporate annual reports (mainly chief finance officers (CFOs)) on the usefulness and concerns of corporate disclosures in Asia's major international financial centre — Hong Kong. From a survey of 98 preparers, it was found that preparers are more inclined to satisfy the information needs of external institutional finance suppliers than those of individual investors and financial analysts or stockbrokers. CFOs and CEOs have more influence on corporate disclosure policies and decisions than board chairmen and company directors. The stock exchange, the Company Ordinance and the local accounting standards setter are more influential external bodies than external auditors and the Securities and Futures Commission. Although only a small percentage of preparers felt that the current disclosures were either effective or very effective in serving investors' needs, only a small number of them agreed to have more financial reporting and disclosure regulations. To close the communications gap and improve market efficiency, they suggested instead an improvement in investor relationships, developing more industry-specific disclosure guidelines and more voluntary disclosures. Implications of these findings are discussed.