Company reporting: which digital media formats and channels do investors prefer?

Listed companies make their report and accounts publicly available to investors in a variety of digital formats. The Financial Reporting Council’s “Financial Reporting Lab” has recently published a report which covers which online formats are preferred, contains some useful tips on the digital presentation of company accounts, and discusses the role of digital media in company reporting more widely.

In putting together this report, the Lab had input from seven listed companies, eight representatives from the investor community, various retail investor bodies, and credit analysts and investor associations.

Annual reports

The annual report is the set-piece of a company’s reporting cycle. The Lab found that most investors prefer a single PDF for digital annual reports, providing “the best mix of attributes of paper and digital“. PDF is the favoured format because it:

• has a clear boundary i.e. what the document is, where it starts and finishes, and the defined period of time it covers, are all transparent;
• can be downloaded efficiently (an obvious differentiator from often unwieldy web pages);
• is searchable; and
• is produced at the same time as the hard copy annual report, and has exactly the same content.

The Lab found that e-books and interactive PDFs are not valued by investors. They are seen both as over-complicated and as having reduced functionality. Investors like PDFs to be:

• optimised for searching;
• not full of columns (dual- or triple-column formats can “lose” the reader by requiring too much scrolling up and down);
• readable and printable in black and white, with frustration around graphs and diagrams that have to be printed in colour to allow interpretation; and
• kept as an archive on the company’s website.

On that last point, investors consider a five year archive as essential, with ten years since as useful. They also like the following to be included in that website archive, alongside annual reports: preliminary announcements, quarterly statements (if produced), half-yearly statements, regulatory filings, and analyst presentations.

One analyst is quoted in the report as saying “the adoption of PDF was so revolutionary that I think that any other changes will not take us much further forward“.

Other communication tools: social media, videos, apps and XBRL

• Social media not valued: Investors see social media as repetitive of other channels, such as the company’s own website, and so don’t view this channel as useful for investor-focused company information. In the words of one analyst, “Why would you look at Facebook for companies’ information? Anything material should be on the website”.
• IR videos: presenters be aware! In the Lab’s words, “many investors are cynical about the use of video by companies. They consider them to be promotional in nature…”. But: “Those investors that value them concentrate on nonverbal information such as body language“.
• IR apps: These are not popular with analysts. “Many investors find the need to have an IR app for each company prohibitive; they are concerned that this uses up space and adds clutters to their devices, especially when following multiple companies”.  Nor are they liked by retail investors, with 88 per cent. saying that they never use IR apps.
• XBRL: There is uncertainty as to what the benefits of XBRL are, given other more easily used solutions.

The legal stuff

One interesting nugget in the report is concern that the provision of articles of association by larger listed companies on their websites is often poor (with some companies not providing their articles online at all). AIM companies were seen as better here, because of AIM Rule 26 requiring articles to be maintained online.

Source: FRC Financial Reporting Lab: Digital present: Current use of digital media in corporate reporting