A survey of the Fortune Global 500 companies' narrative reporting
Primary communications of financial condition and performance from large companies typically include both financial statements and narrative discussion. But what do the narratives actually communicate? Are companies meeting the information needs of investors — a priority audience for these strategic communications? These, in broad terms, are the questions asked and answered in a new PricewaterhouseCoopers survey of the narrative reporting practices of the world’s largest companies, the Fortune Global 500 (G500).
Companies do provide what some call 'contextual and non-financial information' in narrative form about their performance and prospects — but top reporters among the G500 provide a great deal more than average ones. From the investor community’s perspective, there is plenty of room for improvement. From the companies’ perspective, enriching their narrative presentations and accompanying metrics offers the opportunity to provide a view 'through the eyes of management' that investors would highly value.
Companies have a legitimate concern that calls for enriched reporting would mean putting even more effort and cost into reporting. PwC’s commentaries throughout the survey propose that companies have enough latitude to make choices, and to control effort and cost, even as they diligently adhere to regulatory requirements. Taking a top-down, investor-centric approach may be the future, where corporate reporting is concerned. To that end, it’s important to know the broad situation today. That is what the survey offers. It also aims to fuel the debate about how the reporting model can best be developed to get the right information set to the market in the most efficient manner and suggests how executive leadership and boards can assess their company's current reporting practice.
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