Communicating financial information to private shareholders through annual reviews and summary financial statements : the factors that determine readership.
shareholders receiving financial information through annual reviews incorporating a
summary financial statement. Recent changes in the legislation and in share ownership
make it a relevant and timely study that builds on the limited amount of research
carried out in this area. The main aim of the study was to establish the variables that
determine readership of annual reviews.
The theoretical framework was drawn from the philosophy of language and the work
of Wittgenstein, in particular. Both the general communication literature and that
relating to specific communication of financial information to shareholders have been
reviewed as some companies use annual reviews to communicate information to their
private shareholders. A study-specific model was constructed from the prevIOUS
theoretical and empirical work and this was used to test specific propositions.
A quantitative methodology was used for the main part of the study involving three
companies issuing annual reviews. 1,601 usable questionnaires were received and
analysed, which represented a 27% response rate. Prior to the questionnaire survey a
preliminary study, based on focus groups and interviews, refined the questions to be
included in the survey instrument.
The results show that there is a strong association between the importance attached to
the sections of the annual reviews by private shareholders and their level of readership
for all sections. Despite the suggestions of earlier researchers, demographic variables
and reasons for reading the annual reviews showed little association with the level of
readership. The self-image of private shareholders is associated with readership of
summary financial information, but not with readership of the chairman's statement.
The thesis concludes by considering the implications of these results for legislators,
companies issuing annual reviews and further research studies.