Graphical Information in Corporate Annual Report: A Survey of Users and Preparers Perceptions Available to Purchase

This study surveyed the perceptions of users and preparers of Corporate Annual Reports (CAR) regarding graphical information (GI) disclosed in the CAR. Questionnaires were used and sent to (i) 120 selected users, and (ii) 489 CFO of non‐financial companies listed on the main board of Bursa Malaysia for the year 2002. It was found that users ranked GI as second after financial statements. The users of CAR utilized GI to evaluate company’s performance overtime, make comparison with other companies and assist in making investment decision. The KFV graphs preferred are sales, earnings, EPS, share price performance, and cash flow graphs. More than fifty percent of users believed that graphs disclosed in CAR are sufficient. The survey also revealed that 75.4 percent of Malaysian companies included graphs in their CAR. They disclosed sales, earning per share, shareholders fund, earnings, and net tangible assets. These variables were presented in bar, line, pie, and column. However, the most popular type of graph was bar. The perceived major users of GI are mainly financial analysts, potential investors and financial investors. The preparers indicated that the main reasons that hinder companies from disclosing GI in CAR are due to the sufficiency of the existing numerical and narrative disclosure, and inexistence of formal guideline regarding the construction of graphs. The findings also revealed that users were more aware of fundamental principle of graphs construction than the preparers based on the mean scores by both group on the criterion of good construction of graph. Overall, the survey evidenced that graphs are appreciated by both parties as an alternative way of communicating information in a more effective manner.