Management Accounting Research Group Working Papers,
University of Aarhus, Aarhus School of Business, Department of Business Studies

Abstract: This paper studies the extent to which present annual reporting practices fulfill the themes of comprehensive business reporting put forth by the Jenkin’s Report and a series of authoritative reports that have emerged in its wake, and thereby examines which types of information suppliers find relevant. In this paper, a content analysis of the annual reports of all the listed companies in the Danish biotech, pharmaceutical and medicotech industry from the fiscal year 2002/03 is conducted. The sample thus includes 13 companies. The empirical analysis uncovers the characteristics of the information that companies voluntarily supply to the capital market in their annual reports. The findings support the cost of disclosure theory, as a strong correlation between disclosure and market capitalization is found. Especially disclosures of corporate governance metrics and social and sustainability disclosures were significantly correlated with firm size. The overall findings indicate an overweight of context-building and branding-related information in the annual reports, suggesting that annual reporting plays a central role in legitimizing the company’s existence and that their content is driven by appropriate corporate action. The analysis confirms that there is a lack of disclosure of forward-oriented types of information which are comparable over time like e.g. value drivers, critical success factors as well as non-financial information. Finally, awareness towards and disclosure of information concerning the effects of voluntary disclosure were found to be non-existent.

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33 pages, April 26, 2004

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