The internet and technology have revolutionized many aspects of communications; however, communications between companies and investors does not appear to have taken full advantage of this revolution.
In order to understand why this might be and how reporting might evolve in the future, the UK Financial Reporting Council’s Financial Reporting Lab launched a project to look at digital reporting by companies.
Before exploring how corporate reporting might be developed to take advantage of digital technology in the future, the Lab felt that was important to establish how companies use digital mediums to communicate with investors, and how investors view these mediums.
The Lab has reported on this in Digital Present, which is based on analysis conducted by the Lab from in-depth interviews with companies and investors. The interviews were supplemented with the results of an online survey of retail investors.
The report seeks to provide practical guidance to companies and highlights some areas where improvements could be made to what currently exists.
The Lab found:
- Annual reports and its contents are of paramount importance to investors. PDF, with its “search” capabilities, is investors’ preferred format for digital annual reports.
- PDFs offers a range of ways to blend the best of paper and digital formats.
- Companies could make better use of PDFs by thinking about their presentation on screen, keeping them simple, and optimizing them for search.
- Investors need to absorb information on many companies in an efficient manner. Digital communications are of most interest to investors when they bring new information to investors’ attention while avoiding duplication.
- Companies could consider providing clarity on the purpose of each digital channel or tool and the scope of information it contains.
Investors have shown they are open to innovation when it meets their needs to access information relevant to their analysis, across companies and time. To enhance current digital reporting methods and innovate further, it will be important to build on the attributes identified as being most helpful.
The Lab will build on the findings from this stage of the project to inform remaining phases. In the second phase, Digital Future, it will work with companies and investors to develop ideas of how companies could use digital reporting in the future to improve their communication with the capital markets.
What are you views on the future of reporting? The Lab is interested in hearing from you and has released a survey alongside Digital Present seeking views from those involved in the production and use of corporate reporting. The results from the survey, which is open until the end of June, will help shape the Digital Future project.
