The information gap in annual reports

Following radical restructuring of the electricity industry in New Zealand since 1987, the government adopted a “light‐handed” regulatory regime that used market‐based methods involving competition and transparent accountability. This accountability is in part discharged through the provision of information in the corporate annual report. To assess the quality of that communication, a disclosure index was developed and applied to the annual reports of the 33 electricity retail and distribution companies which comprise the entire industry in New Zealand. The index was developed using the ideas and opinions of 15 experts representing broad stakeholder groups. This paper compares the resulting scores for the extent and quality of each index item with the level of importance of those items as stated by the panel. Many items are not adequately disclosed, resulting in an information gap between stakeholders’ expectations and the disclosures provided by the electricity companies. This paper identifies the items and the detail about them needed to close that gap.

[1]  Thomas W. Jones,et al.  An Empirical Investigation of the Extent of Corporate Financial Disclosure in the Oil and Gas Industry , 1993 .

[2]  Rasoul H. Tondkar,et al.  Environmental Factors Influencing Accounting Disclosure Requirements of Global Stock Exchanges , 1992 .

[3]  Bernard Raffournier,et al.  The determinants of voluntary financial disclosure by Swiss listed companies , 1997 .

[4]  Teresa P. Gordon,et al.  Public accountability: a new paradigm for college and university annual reports , 2001 .

[5]  Terence Cooke,et al.  The Impact of Size, Stock Market Listing and Industry Type on Disclosure in the Annual Reports of Japanese Listed Corporations , 1992 .

[6]  Alan R. Cerf,et al.  Corporate reporting and investment decisions , 1961 .

[7]  C. Firer,et al.  Information disclosure in annual reports in South Africa , 1986 .

[8]  S. H. Dinius,et al.  Application of the delphi method in identifying characteristics big eight firms seek in entry-level accountants , 1988 .

[9]  Philip J. Shrives,et al.  The use of disclosure indices in accounting research: A review article , 1991 .

[10]  L. S. Chang,et al.  The perceived usefulness of financial statements for investors' decisions , 1985 .

[11]  M. Pratt,et al.  An insight into accountability and politics in universities: a case study , 1998 .

[12]  Michael Sherer,et al.  The value of corporate accounting reports: Arguments for a political economy of accounting ☆ , 1984 .

[13]  J. Wiseman,et al.  An evaluation of environmental disclosures made in corporate annual reports , 1982 .

[14]  H. Davey,et al.  The Annual Reports of New Zealand Electricity Companies: Assessing Quality , 2001 .

[15]  Stephen L Taylor,et al.  DISCRETIONARY DISCLOSURE OF RESERVES BY OIL AND GAS COMPANIES: AN ECONOMIC ANALYSIS , 1992 .

[16]  E. Black,et al.  International Accounting and Multinational Enterprises , 1981 .

[17]  R. Craig,et al.  Corporate Accounting Disclosure in ASEAN , 1998 .

[18]  L. Eng,et al.  The Relation Between Annual Report Disclosures, Analysts' Earnings Forecasts and Analyst Following: Evidence From Singapore , 1999 .

[19]  M. Zarzeski.  Spontaneous Harmonization Effects of Culture and Market Forces on Accounting Disclosures Practices , 1998 .

[20]  U. Tornqvist.  An empirical study of accountability: delegation of responsibility and external disclosure in some Swedish companies , 1999 .

[21]  Lee D. Parker,et al.  Corporate Annual Reporting: A Mass Communication Perspective , 1982 .

[22]  Christine Botosan.  Disclosure level and the cost of equity capital , 1997 .

[23]  Kenneth R. Austin,et al.  Disclosure Quality In Governmental Financial Reports - An Assessment Of The Appropriateness Of A Compound Measure , 1986 .

[24]  A. Lennard,et al.  Reporting financial performance : current developments and future directions , 1998 .

[25]  S. Gray,et al.  Factors Influencing Voluntary Annual Report Disclosures By U.S., U.K. and Continental European Multinational Corporations , 1995 .

[26]  Russell J. Lundholm,et al.  CROSS- SECTIONAL DETERMINANTS OF ANALYST RATINGS OF CORPORATE DISCLOSURES , 1993 .

[27]  P. Sutcliffe.  Financial reporting in the public sector -- a framework for analysis and identification of issues , 1985 .

[28]  Kamal Naser,et al.  Firm-specific determinants of the comprehensiveness of mandatory disclosure in the corporate annual reports of firms listed on the stock exchange of Hong Kong , 1995 .

[29]  James J. Benjamin,et al.  Differences in Disclosure Needs of Major Users of Financial Statements , 1977 .

[30]  R. S. O. Wallace,et al.  Corporate Financial Reporting in Nigeria , 1988 .

[31]  Stephen L. Buzby.  COMPANY SIZE, LISTED VERSUS UNLISTED STOCKS, AND EXTENT OF FINANCIAL DISCLOSURE , 1975 .

[32]  M. Firth.  The Impact of Size, Stock Market Listing, and Auditors on Voluntary Disclosure in Corporate Annual Reports , 1979 .

[33]  Terence Cooke.  DISCLOSURE IN JAPANESE CORPORATE ANNUAL REPORTS , 1993 .

[34]  Jennifer Law,et al.  ACCOUNTABILITY AND LOCAL AUTHORITY ANNUAL REPORTS: THE CASE OF WELSH DISTRICT COUNCILS , 1991 .

[35]  G. McNally,et al.  Corporate Financial Reporting in New Zealand: An Analysis of User Preferences, Corporate Characteristics and Disclosure Practices for Discretionary Information , 1982 .