Who Reads This Stuff?

06 May 2009

As the IRO of a publicly traded company, you may be tasked with producing the annual report every year. Have you ever wondered who actually reads that annual report?  After all, the bulk of an annual report these days is historical information that has already been made available to the public.

I can tell you one thing – sell-side financial analysts certainly aren’t waiting in line to receive their copy, hot off the press.

How do I know that?  I recently embarked on a scientific initiative that studied the topic.  I called the scientific initiative “Let’s ask a bunch of analysts if they actually read annual reports”.  Impressive, isn’t it?

I asked 24 analysts, who cover various sectors, if they actually read the annual reports of the companies that they cover.

8 out of the 24 admitted that they don’t refer to the annual report at all.  A whopping one third!  And that’s only the analysts who would admit it.  The vast majority of the remaining analysts mentioned that they only “skim” the annual report for any new or relevant information.

Something to keep in mind the next time you are evaluating the time, energy, and money spent on your annual report.

2 Responses to “Who Reads This Stuff?”

  1. Francis Moran

    As someone who writes a fair number of annual reports, I always struggle with how to make them more readable.

    But I don’t see the sell-side guys as my target. In fact, I’m gob-smacked that as many as two-thirds of your respondents suggested they look at ARs at all.

    As you note, Anil, if they’ve been doing their jobs, there’s nothing in an AR that they don’t already know. They’ve had the financials in hand for months, and they’ve heard the MD&A in one form or another probably countless times if they’re following the company.

    I approach an AR as an important IR vehicle, certainly, but also as an important marketing, sales, recruitment and corporate communications vehicle. That puts a premium on sparkling story-telling, which would probably be lost on the sell-side guys anyway.


  2. Anil Dilawri

    Good point, Francis.

    Makes one wonder if the AR should remain the IR department’s responsibility (and within the IR department’s budget)…

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