Annual Report in Corporate America Today Research Paper

Annual Report in Corporate America Today - Research Paper Example Securities Exchange Commission (SEC) was established in the year 1929 after the Great Depression and market crash of 1929-1930. The SEC Act in 1934 was passed in order to meet the fears of the investors and encourage them to invest in the stocks again. In this scenario, companies started preparing annual reports. SEC filings contain only the financial part, but the annual report also includes the non-financial performance of the company. It describes the organizational structure and the other internal aspects of the company so that the investors and shareholders can get a transparent picture of the company. The annual report was a push for corporate accountability. Purpose Annual report is a powerful tool for the shareholders and the investors because the information available in the annual report gives them a complete picture regarding the financial and the financial condition of the company. ...to present the true picture of the company in the external environment, so that the resu lts of the internal business functions are clear in front of the investors. In the turbulent economic situation, when most of the companies are becoming victims of insolvency, investors are apprehensive to take decisions. In such a situation it becomes important for a company to publish a detailed annual report. The significant amount of research studies have been conducted in the field of accounting information conveyed through the prices of securities of a company (Gonedes, and Dopuch, 1974). However, not much research studies have been undergone regarding the usefulness of financial statements for facilitating the decision-making process of investors of a company. In one of the research studies, it has been argued by Chang, Most, and Brain (1983) that the information that is present in the financial statements published by a company assist the investors for their investment decision purposes in a significant way. Merits and Demerits Annual report is an important document issued b y the company to reveal its financials at the end of the year. So this signifies that purpose of preparing the report is positive and for the advantage of the investors and shareholders. Moreover, there are lots of other information that play the significant role in analyzing the marketing aspect of the company such as the market share, position among the competitors, target customers of the company, etc. The report also includes a sustainability analysis of the company. Other than this, the community programs designed for delivering the social responsibility is also described with statistics, so that solid proof can be provided to the shareholders regarding the spending of the company.