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Financial Reporting Lab publishes report on investors’ views on digital communication used by companies in corporate reporting

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  • Financial Reporting Lab Image

28 May 2015

The Financial Reporting Council's (FRC's) Financial Reporting Lab (“the Lab”) has today published a project report on investors’ views on digital communication used by companies in corporate reporting. The project report indicates that investors are open to digital forms of communication when it can sufficiently support their needs for corporate information.

The report forms part of the FRC’s ‘Clear and Concise’ initiative, launched in June 2014 and is the first phase in the Lab’s larger project Corporate reporting in a digital world launched in May 2014. 

It considers the views of investors on a range of digital communication mechanisms currently used by companies to report financial and non-financial information that would be typically found in the investor relations section of a company website.  The report focuses on the annual report as the Lab found that “the annual report remains of paramount importance to investors” and then explores other channels that companies use.

Eight companies, 15 institutional investors and five private retail investors were interviewed for the project.  Additional input was received from an online survey, the slides of which are available from the FRC website below.  The key findings were:

  • Most investors prefer PDF for digital annual reports and indicated that PDF provides the best mix of attributes of paper and digital. 
  • There were a number of attributes that investors valued in a PDF annual report such as the ‘search’ function that allows investors to quickly pinpoint areas of most interest to them. 
  • Investors feel that companies could be making better use of PDFs.  Some suggestions included:
    • Tailoring the PDF annual reports to look better on screen, for example use of landscape orientation or reducing use of columns.
    • Keeping the PDF simple.  The Lab found that interactive PDFs were not favoured by investors especially those private retail investors’.
    • Optimising the PDF for searching by using a single PDF for the annual report and ensuring terminology is consistent across sections of the report.
    • Providing an archive of PDFs over a sufficiently lengthy period with a 5 year period considered fundamental.

In terms of other communication channels that companies use to communicate information alongside the annual report (such as social media and apps) the report found that these other forms of communication are most useful when they provide new or additional information and do not replicate information provided by other channels.  Specifically, social media was not seen as a useful channel for company produced, investor-focused information and apps are not popular with investors.  A number of other investor observations on other forms of communication are provided in the full report.  To assist companies, investors who participated in this project suggest that companies (in relation to other communication channels and tools):

Reduce duplication and focus development towards tools and channels which provide new or additional information.

Acknowledge that investors follow more than one company by making tools and channels more consistent in scope and operation with other companies, making them easy to access and locate.

Make the purpose of each channel or tool clear to investors, and clarify its contents.

The Lab highlights that the report is not intended to form guidance and “companies should consider whether the steps identified by the Lab are suitable to their own circumstances”.  Following this report the Lab will use these findings to inform the next stage of its Corporate reporting in a digital world project - Digital Future.  This project will also consider areas that act as brakes on innovation.

Further findings are included within the full report which can be downloaded below.  Alongside the report, the Lab has also released a survey seeking views on digital reporting from those involved in the production and use of corporate reporting. The survey will be open until the end of June and can be accessed using the links below.

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