Understanding investors: directions for corporate reporting

This report is the second of a four-part project examining what investors want from corporate reporting and how organisations are responding to their needs. It outlines the kind of information investors need to make their decisions, how they now like to receive that information (both the format and the communications channels), and their level of trust in what they receive.


Better reporting is essential to the smooth running of the capitalist system. It helps companies attract investment and build deeper relationships with investors, and it allows stakeholders to develop a deeper understanding of a company‚Äôs strategy and position. Stronger relationships with investors mean that companies have greater financial support and stability. 

Clarity and transparency matter. More than two out of three investors said they would apply a bigger discount to a company if its corporate reporting lacked clarity. Good reporting can also help to strengthen financial markets and ensure that capital flows to where it can be most usefully invested.

The survey reveals a number of clear areas where improvements in reporting are required. Many investors say that there is too much clutter in corporate reporting, and they worry that management has too much discretion is how numbers are reported. 

They are also divided over whether the annual report remains a useful document. Although the majority value it, there is a sizable minority that believes it is no longer fit for purpose.

Policymakers and standard setters must give careful consideration to these issues, along with initiatives that are perceived to be improving the reporting framework. Innovations such as integrated reporting find strong support from investors but, against a backdrop in which investors are already overloaded with information, care must be taken that new reporting initiatives provide genuinely useful additional input. 

Investors too must seek to find ways to better assimilate a wider range of information. Their ability to analyse increasingly complex and interrelated data, often in real-time, will grow in importance. Investors and corporates also bear a responsibility. There needs to be constructive engagement on reporting issues from both sides so that the broader financial markets are served effectively. At the same time, investors need to engage more with the regulatory and standard-setting processes, while recognising that some of their demands may be unrealistic.

There is a complex web of relationships between auditors, regulators and companies as well as broader stakeholders. Nevertheless, at its heart, the relationship between company and investor is paramount.