Academic journal article The Accounting Historians Journal

The Changing Form of the Corporate Annual Report

Academic journal article The Accounting Historians Journal

The Changing Form of the Corporate Annual Report

Article excerpt

This paper reports on observations of measurable changes in the form of annual reporting by very large British industrial corporations. It provides a commentary on how their annual reports have increasingly appeared to be used for purposes other than financial stewardship. More specifically, the purpose of the paper is to document and discuss a distinct change in annual reporting emphasis -- i.e. from predominantly accounting communications of corporate financial performance to non-accounting projections of corporate identity in a consumer-orientated world. The researched data are consistent with Ewen's [1988] reported argument of Sikes [1986] that corporate executives use annual reports as part of an image management function to influence external stakeholders. This switch from an accounting to a non-accounting focus in annual reporting raises questions concerning the effectiveness of annual reports in the governance of corporations.

THE CORPORATE ANNUAL REPORT

The study observes developments between 1965 and 1988 in the form of the annual financial report of twenty-five of the largest British industrial corporations. The annual report is a long-lived mechanism of corporate accountability and governance. Evidence of change in this focus is observed and discussed in the context of Ewen's general thesis of corporate image management, and Sikes' specific argument regarding annual reports. The analyzed empirical data suggest that, at least for these very large corporations, annual reports have ceased to be merely vehicles for communicating messages about corporate financial performance. Instead, they appear to have become mechanisms to communicate stylized images of corporate identity. The data suggest the annual reports of these British corporations have evolved beyond their intended regulatory mission, and now serve a managerial purpose of a non-accounting nature.

The paper is constructed to, first, provide a review of Ewen's analysis of the politics of style, and how it relates to corporate annual reporting. Second, it presents qualitative data relating to the annual reports of a sample of twenty-five British industrial corporations for a period between 1965 and 1988. Third, it discusses the data observations in the context of Ewen's arguments. Fourth, it expresses a concern based on this discussion about the future of corporate annual reporting.

UNDERLYING THEORY

The theory on which this study is based describes an observed and persistent twentieth century practice of using stylized images to provide perceivable impressions of rationality in the corporate enterprise. The author of this theory is Ewen [1988]. Other writers, however, have presented consistent arguments, and the interested reader is recommended to study Featherstone [1991], Harvey [1989], and Morgan [1986]. Ewen's arguments are complex, but are supported by empirical observations from business history. The following is a condensation of his thesis. Citations refer to specific pages in his 1988 text.

Ewen's initial premise is that there is an observable phenomenon called style which aesthetically reflects societal assumptions, values, and structures [p. 3]. He reveals the phenomenon to be historically linked to consumption and, in modern times, to the power of mass media to manipulate and influence consumers [p. 10]. More specifically, the politics of style go back to the Middle Ages, and the formation of market economies and the circulation of wealth within communities. It relates to the emergence of conspicuous consumption -- from luxury goods as a form of social currency in the Renaissance onwards; to the establishment of a consumer democracy by the nineteenth century [pp. 26-32]; and, finally, to the "throw-away" society of the late twentieth century [p. 233]. In the politics of style, according to Ewen, it is the surface rather than the substance of goods and services in the market which dominates [pp. 33 and 96]. In effect, style becomes a compensation for substance [p. …

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