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A comparative study of the use of financial graphs in the corporate annual reports of major u.s. and u.k. companies

Beattie, V., and Jones, M.J. (1997) A comparative study of the use of financial graphs in the corporate annual reports of major u.s. and u.k. companies. Journal of International Financial Management and Accounting, 8 (1). pp. 33-68. ISSN 0954-1314 (doi:10.1111/1467-646X.00016)

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Publisher's URL: http://dx.doi.org/10.1111/1467-646X.00016

Abstract

The use of graphs to disclose information in corporate annual reports represents a significant dimension in financial disclosure management. Surprisingly, no inter-country comparative analysis of this area of voluntary disclosure has been conducted. This study compares the graphical reporting practices in the 1990 annual reports of 176 leading U.S. and U.K. industrial companies. Ninety-two per cent of U.S. companies use graphs compared with 80% of U.K. companies; the mean number of graphs per company being 13.0 and 7.7, respectively. Sales, an earnings measure, earnings per share and dividends per share are the four most frequently graphed aggregate financial performance variables in both countries. Significant differences in several of the variables graphed are found and explained in terms of environmental factors. In both countries, evidence of graphical information manipulation exists in the form of selectivity, measurement distortion, and presentational enhancement. Moderate evidence supports the hypothesis that U.K. companies are more likely than U.S. companies to adopt interpretative shading. Regulators need to clarify the responsibilities of directors and auditors by setting graphical guidelines.

Item Type:Article
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Beattie, Prof Vivien
Authors: Beattie, V., and Jones, M.J.
Subjects:H Social Sciences > HF Commerce > HF5601 Accounting
College/School:College of Social Sciences > Adam Smith Business School > Accounting and Finance
Journal Name:Journal of International Financial Management and Accounting
Publisher:Blackwell Publishing
ISSN:0954-1314
Copyright Holders:Copyright © 1997 Blackwell Publishing
First Published:First published in Journal of International Financial Management and Accounting 8(1):33-68
Publisher Policy:Reproduced in accordance with the copyright policy of the publisher

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