Evolution of annual report: A longitudinal investigation between 1973 and 2015

• Date: 01 November 2019
• Published date: 01 November 2019
• Author: Ali Uyar
• DOI: http://doi.org/10.1002/jsc.2303

RESEARCH ARTICLE

Evolution of annual report: A longitudinal investigation

between 1973 and 2015

Ali Uyar

La Rochelle Business School, Excelia Group,

La Rochelle, France

Correspondence

Ali Uyar, La Rochelle Business School, Excelia

Group, 102 rue de Coureilles—Les Minimes,

17024 La Rochelle Cedex 1, France.

Email: aliuyar@hotmail.com

Abstract

This study analyzes how corporate annual reports have evolved between 1973 and

2015. The coverage of annual reports is cyclical while the average cycle spans over

several years rather than one single year. We suppose that external shocks such as

the financial crisis affect this trend. The results show that reports have substantially

improved in content and design and presented more information that is relevant for

the stakeholders. In particular, annual reports have evolved into more comprehensive

business documentation. It is undergoing an evolution in financial information as well

as in nonfinancial data. Although the stockholders were the main target of annual

reports in earlier years, the stakeholders seem to be the main target of the report in

later years. Over time, reports gained more professional look while presenting more

voluntary and mandatory information.

1|INTRODUCTION

Corporate reporting is undergoing a tremendous change in content

and presentation format. This change is partially carried out man-

datorily through regulations and partially done voluntarily. Corpo-

rate scandals and perceived shortcomings of corporate reporting

during financial crises around the world also play an important role

in this evolution (Leuz, 2010). Besides, corporate report types and

guiding frameworks are diversifying their aims and contents. How-

ever, primarily and initially, annual report was the only report

issued and is still being published by companies. Although reports

on the specific theme of corporate social responsibility and sus-

tainability were developed in subsequent years, they did not

replace the annual reports as the previous ones intended to pro-

vide different types of information. Thus, annual reports remained

as the primary source of documentation for stockholders and other

stakeholders. Indeed, although past annual reports used to include

almost only financial information, recent annual reports include

nonfinancial as well as financial information. For example, corpo-

rate social responsibility reporting is becominga part of the overall

accounting framework (Tschopp & Huefner, 2015). The driver

behind releasing nonfinancial information is that numbers in finan-

cial statements may not be sufficient to assess a company's overall

performance—there is more that should meet public expectations

(Othman & Ameer, 2009).

Not only companies but also not-for-profit organizations utilize

annual report as the main tool for communicating with stakeholders

as it builds community support, fosters public trust, and builds a repu-

tation (CICA, 2011). The evolution of corporate social responsibility

reports or sustainability reports has been the subject of a number of

studies (e.g., Jenkins & Yakovleva, 2006; Altintas, Adiloglu, & Altintas,

2007; English & Schooley, 2014), which, however, have not

influenced the evolution of annual reports.

This study aims to investigate the evolution of annual reporting

longitudinally over the long period between 1973 and 2015. The

study will highlight the overall development of annual reporting trend

as well as the evolution of other types of reporting under specific sub-

titles. The remainder of the article is organized as follows. The next

section defines and very briefly describes the evolution of corporate

reports. The third section highlights the methodology of the study.

The fourth section presents the findings, and the last section presents

the conclusion.

JEL classification codes: M10, M41.

DOI: 10.1002/jsc.2303

Strategic Change. 2019;28:517–521. wileyonlinelibrary.com/journal/jsc © 2019 John Wiley & Sons, Ltd. 517