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Reporting financial and non-financial performance

Reporting financial and non-financial performance: Financial, social and environmental disclosures


This is a research assignment paper designed to explore the areas of reporting financial and non-financial performance wherein focus has been made on financial, social, and environmental disclosures. The research paper covers the practices in adopted by corporate organizations in relation to reporting of financial and non-financial performance, which are located in the UK and Europe. Basically this research paper has been prepared by making evaluation of the published annual reports and CSR (Corporate Social Responsibility) reports by companies from various industries and also covers the evolution of reporting practices and standards by the specific organizations. The main aim of this research paper is to analyze the effectiveness of practice adopted by corporate organization for communication of financial and non-financial performances annually and how it actually impact on business performance and public image of the organizations. Another stand taken while designing this research paper is to analyze, how the corporate organizations are using this method as communication tool to interact with its stakeholders. The research paper covers the basic aims and objectives of this research study, a detailed literature review on the subject matter, methodology for collection of data and its analysis, discussion of the findings and results of data analysis, and a summarized conclusion.

Table of Contents

Abstract 2

Chapter-1: Introduction. 4

1.0      Background of the research: 4

1.1      Problem statement: 4

1.2      Rationale of the research: 4

1.3      Background Literature review: 4

1.4      Aim of the research: 5

1.5      Objective of the research. 5

1.6      Research questions: 5

1.7      Methodology Brief: 6

1.8      Chapter Summary: 6

Chapter-2: Literature Review.. 7

2.1      Concept of legitimacy and stakeholders’ theory. 7

2.2      Evaluation of performance and measurement used. 8

2.3      Corporate Social Responsibility Reporting. 9

2.4      Strategy disclosures in the annual reports. 10

Chapter-3: Methodology. 12

3.0      Data collection Method. 12

3.1      Data analysis Method. 13

3.2      Sampling Technique. 14

3.4      Sample Size. 14

Chapter-4: Analysis and Presentation of data. 16

4.0      Analysis of collected data and information. 16

4.1      Financial information disclosure analysis. 16

4.2      Social and environmental disclosures analysis (non-financial information) 19

Chapter-5: Discussion of Findings. 22

Chapter-6: Recommendations and Conclusions. 26

Recommendations. 26

Conclusions. 26

References. 27

Annexures: 28


Chapter-1: Introduction

1.0 Background of the research:

The research paper covers the practices in adopted by corporate organizations in relation to reporting of financial and non-financial performance, which are located in the UK and Europe. Basically this research paper has been prepared by making evaluation of the published annual reports and CSR (Corporate Social Responsibility) reports by companies from various industries and also covers the evolution of reporting practices and standards by the specific organizations. Reporting of financial as well as non-financial information by the corporate organizations plays a crucial role between the organization and its stakeholders, because it would be considered as main tool for communication of important information about the organization’s activities and its results.

Reporting financial and non-financial performance

1.1 Problem statement:

The problem statement to be investigated is related with the extent to which the companies based in UK following the disclosure procedures for dissessmination of financial as well as non-financial information with special focus on financial, social, and environmental disclosures. The problem statement makes focus on the information included by corporate organizations in their annual reports and CSR and other similar reports. This research study is replication of previous research being already conducted on subject matter under consideration which was based on the annual reports of the corporate organizations based in UK and Europe.

1.2  Rationale of the research:

The different stakeholders of an organization are using the financial as well as non-financial information for different purposes and based on that filtered information they are taking such important decisions, which are associated with that particular organization or industry. With the rise of information based industry, it becomes evident for the corporate organization to give equal importance to financial and non-financial information when they are communicating with their stakeholders. Reporting of non-financial information with financial information related to performance measuring system helps that organization to develop a strong strategic alignment for communication of information.

1.3 Background Literature review:

Analysis On External Judicial Practice And Internal Governance Mechanism

In addition to the financial information and figures that is part of the annual report of organizations; the performance has been measured through the evaluation of its relevant non-financial disclosures that is related with environmental, social, and governance practices (Watson & Monterio 2011). The theory of stakeholder emphasizes on the word “corporation”, which means a constellation of competitive and cooperative interests that are having its own intrinsic value (Donaldson & Preston 1995). Stakeholder theory also gives importance to maintain the relationship with all the stakeholders by the business managers while making the crucial decisions, whereby they can serve to the many masters under consideration. Moreover, it is not possible for a corporate organization to include all the non-financial information while preparing its annual or other reports designed to make communication with its stakeholders, therefore there is requirement of specific structure or standard form of disclosure policy that could be followed by all the organizations in order to maintain the uniform way of dissessmination of information (Directive 2014/95/EU).

1.4 Aim of the research:

The main of aim of this study is to investigate the disclosure practices implemented by the UK companies where the special emphasis has been made on the financial and non-financial information that is part of the annual report, CSR report, or similar reports issued by the companies. In the modern age another thing gets important is understanding the needs and requirements of the stakeholders and based on that approach, the corporate organization are setting their process for reporting of financial and non-financial information. In the past, the annual reports issued by the organization were only included the financial measures, however since last two decades, new approach has been developed by the organization to incorporate non-financial information as well that enhance the credibility of the report in many ways.

1.5 Objective of the research

The objectives of this research study is to investigate how various corporate organization working in UK dealing with reporting of financial and non-financial information, what particular strategy they are following, what common non-financial information are included in the report, what market value been added with the amount of non-financial information reported to the stakeholders, and many more. Moreover, out specific interest lies in the disclosure policy adopted by the public sector organizations based in UK and how they have formalized the corporate disclosure practice since last two decades. Overall, there was much debated undergone during last few years in relation to incorporation of non-financial information in annual report and various aspects attached to this model; such as quality of non-financial information, amount of non-financial information, its relevancy with financial information, whether it helps the stakeholders or make their decision process more easy and legitimate or not, etc.

1.6 Research questions:

The research questions of this paper have been motivated from recent initiatives from European Commission; where it has requires the large companies where more than 500 employees are working, to disclosure the non-financial information in relation to the social and environmental impact. By detailed research study on the above discussed topic, various questions have been tried to answer under this research paper. The research questions designed under this study include the following types of questions:

  • What kind of non-financial information included by the large companies in their annual reports?
  • What kind of internal dimensions used in order to measure the social responsibility?
  • What are the ways and documents used by large companies for dissessmination of information with their stakeholders?
  • What are the advantages and disadvantages of incorporation of non-financial and financial information in annual reports?

1.7  Methodology Brief:

The methodology followed under this research paper in order to gather required data and information is done through secondary data collection method, wherein data are collected from published annual reports and other CSR reports of companies. Based on the collected information, an exploratory analysis has been made based on the information contained in the annual reports and different relevant web pages of companies whose annual reports are analyzed. This form of analysis has been chosen because under this methodology, most of the information would be easily available that is issued by large companies for large stakeholders publically. Moreover, the information communicated by large companies through annual reports are most accurate and as per requirements of various laws and standards applicable from time to time.

1.8 Chapter Summary:

The research paper has been categorized into several chapters, after detained introduction in Chapter-1, under Chapter-2; detailed literature review provided summarizing findings of various authors in the area of disclosure of financial and non-financial information, followed by Chapter-3 of detailed methodology on how the research process conducted, followed by Chapter-4 of analysis and presentation of data, followed by Chapter-5 of discussion of findings, and last ended with Chapter-6 with recommendations and conclusions.

Chapter-2: Literature Review

2.0       Emergence of concept of reporting requirement of non-financial information

Considering the usefulness of the reports issued by companies and the extent of contents of the reports, the companies should have complete autonomy. In this increasing competitive world, there is greater demand of transparent accountability and legitimacy, which implied for greater amount of information disclosures in relation to various actions taken by the organizations. With the emergence of this new approach has created an environment where in the traditional financial information is no longer being remain sufficient in this situation. With several economic crises occurred in the world market, organizations were finding more and more external pressures to be more accountable and responsible within the business environment in which they are operating (Healy, 2001). So considering all these aspects, importance of non-financial information has been improved in the recent years where it works as supportive to the financial information that is what organizations already offering since the traditional financial reports (Hassan, et al, 2009). With inclusion of information related to non-financial information related to contribution in the areas of social and environment, an organization is able to meet the demands of various stakeholders on issues in relation to legitimacy and accountability. After several corporate corruption scandals occurred at worldwide, there is increasing demand occurred for corporate governance and disclosures of the social responsibility information (Chatterjee, et al, 2011). The organizations are trying to balance between financial and non-financial information that provides transparency, which creates the information flow in the stakeholder interest and helps them to engage in business management of the organizations and also in participation of the decision making process. Warren et. al. had provided that the social affairs of an organization can be improved by stakeholders’ engagement and public participation. Sashi gave importance on the long-term relationship between organization and stakeholders that ultimately helps an organization for long period of survival in the market.

2.1 Concept of legitimacy and stakeholders’ theory

The concepts of legitimacy and stakeholders theories give importance to greater amount of transparency in information supplied to the stakeholders, and it helps in balancing the communication flow with stakeholders whereby the organization can inform their actions and with that it can legitimate its behaviour (Balasubramanian, et al, 2005). The concept of legitimacy and stakeholder theories also explained the importance of communication management; more specifically for non-financial information that helps an organization in fulfilling the responsibility of being transparent and to achieve the commitment towards all the stakeholders associated with the organizations; directly or indirectly. The theory of stakeholder emphasizes on the word “corporation”, which means a constellation of competitive and cooperative interests that are having its own intrinsic value (Donaldson & Preston 1995). The reason for this article is to list various types of information spread of corporate social responsibility and feature the channels utilized deliberately for this reason. In total, need to list favorable circumstances and detriments of the way to add to the scrutinizing of the current utilization of assets for the advancement of information which is socially responsible. The presence of corporate social responsibility must look for benefit ceaselessly, given that such an excursion doesn’t cause bad behavior (Abreu, et al, 2015). Stakeholder theory also gives importance to maintain the relationship with all the stakeholders by the business managers while making the crucial decisions, whereby they can serve to the many masters under consideration. The connection that this hypothesis presents between the organization and the social responsibility centers around the socially right, in this way, it accepts a connection that differs as indicated by the hierarchical destinations. The stakeholders’ theory also plays crucial role in addressing the social demands and expectations from the corporate organizations that is focuses on global interests of stakeholders rather than individual interests of only shareholders (Cahan, et al, 2005). The center of this theory is to make an incentive for a gathering of stakeholders, not simply people who take an interest in the capital of organizations, an intricate errand because of the variety of interests among the gatherings that, in the cutoff, may even be differentiating (PEREIRA, 2015; FARIA, 2015). For the comprehension of this hypothesis depends on the receipt of advantages for the organization from its stakeholders, so the organization is obliged to give an arrival, satisfying them somehow or another. The relationship of this hypothesis among business and social responsibility is changeless and has the inclusion all things considered (Conceicao, et al, 2011). Hence, the act of social responsibility isn’t an obstacle to the making of benefit, given that the best approach to acquire such benefit doesn’t bargain the earnestness of the business, that is, without making hurt someone else or being dependent upon misrepresentation, in an economy that is open and free.

2.2 Evaluation of performance and measurement used

In addition to the financial information and figures that is part of the annual report of organizations; the performance has been measured through the evaluation of its relevant non-financial disclosures that is related with environmental, social, and governance practices (Watson & Monterio 2011). Disclosure of financial and non-financial information also emphasized on the concept of accountability which means improvement of the stakeholder involvement and creation of value, which can be implemented through quality disclosure of non-financial information in connection with financial figures (Hąbek, 2016). In the past, since many years there was a common trend of dissessmination of financial information in the annual report of an organization, and under the strict regulatory framework, this becomes more rigid where the financial information has been reached to general acceptance level (Oliveira, 2006). Counter to this traditional approach, there was efforts found to promote the dissessmination of non-financial information at worldwide. European Union is actively engaged in taking a series of actions in order to make legal standardization of non-financial information by making issue of Directive 2014/95/EU. Dumay et al found that, the organizations operated within Europe are increasingly using the management models where focus has been on the dissessmination of non-financial information in relation of actions and performance of the organization throughout the accounting period (Chen, 2018). Moreover, it is not possible for a corporate organization to include all the non-financial information while preparing its annual or other reports designed to make communication with its stakeholders, therefore there is requirement of specific structure or standard form of disclosure policy that could be followed by all the organizations in order to maintain the uniform way of dissessmination of information (Directive 2014/95/EU). In the UK, the legislation sets out the requirements of non-financial reports as a part of the annual management report, which includes social matters, environmental matters, employees’ growth, anti-corruption, human rights matters, and anti-bribery matters (EU Commission, 2014). These changes in the private sector were also pushed the public sector to incorporate and implement the guidelines in order to improve the transparency and legitimacy in the public sector organizations (Bagdonienė, et al, 2011). So far as public sector organizations are concerned, they are more expected to make disclosures of financial and non-financial information because they are providing administrative services that are being financed through public taxes. Although there were several actions being taken for improvement of disclosure procedure of the organizations at private and public sector both, one important issue still coined in the market is that the traditional form of disclosure of financial information doesn’t help non-professional people to obtain the required information for their decision making (Hope, 2003).

2.3 Corporate Social Responsibility Reporting

The dissessmination requirement with respect to non-financial information is also known as Social Responsibility Reporting. EU directive has highlighted six types of issues that should be part of the Social Responsibility Reporting; environmental, social, anti-corruption, human rights matters in relation to employees, and anti-bribery matters (Ahmed, K., & Courtis, 1999). Arvidsson had pointed out that, the organization should include the information related to all the intangible assets or capitals within their annual report that focuses on human, social, environmental, relational, and organizational because it helps the organization in creation of management values (Guthrie, 2000). Similarly there is requirement of uniform structure in for dissessmination of financial information that follows the uniform accounting protocols and allowed for greater transparency for the users (Cowper, 2011). The main objective of setting out these protocols is to provide reliable financial information in relation to actions taken by the organizations so that various stakeholders can use this information in similar way and able to answers their questions for decision making (Axelrod, 1976). A greater combination of financial and non-financial information in disclosure procedures not only provide greater compliance to the rules but also helps the stakeholders to understand where the resources of the organization have been used which is being the special interest of understanding for all the stakeholders (Bajpai, 2001). In this relation, the use of funds for protection and development of social and environmental aspects takes the greater importance where the organization is developing inclusive business objectives to incorporate all these matters. These activities have been termed as “green-finance” that helps an organization in enhancing its reputation and also enhance the legitimacy with which all the stakeholders are connected (Belal, 2011).

It is imperative that the reporting of non-financial information has been progressed with spread of transformation in various areas such as social, environmental, legal, ethical, and various accounting framework which are regulating this reporting. The business organizations operating in UK are using formal structures for reporting of social and environmental responsibility initiatives undertaken by them periodically. Carroll (1991) had described Corporate Social Responsibility as a multi-layered concept where four major aspects were highlighted; economic, ethical, legal, and philanthropic responsibilities. The developing volume of information presents a few types of scattering pointed it is to advance activities that affect business execution and reflection on the vision that stakeholders have of the organization in the network where it works (Caroll, 1999). An ideal Corporate Social Responsibility framework has two basic dimensions, one is ethical and another is philosophical. This dimensions become more important in a nation where there is a wide gap exists between the income of people and their living standards, which actually represent the socio-economic status of that nation. Narayan Murthy (2004) has provided that, the concept of CSR is related with maximum creation of shareholders’ value who is working under the circumstances where it is very important to treat fairly to all the associated stakeholders. In the starting of trend of CSR culture, there was little documentation found in relation to social responsibility initiatives, however with the passage of time and growing realization towards participation in social activities at worldwide having main objective to improve the overall working environment (Shinde, 2005).

2.4 Strategy disclosures in the annual reports

The annual reports issued by large companies majorly include their corporate financial statements and related notes and disclosures. The concept of strategy disclosure was coined before last decade, and it has gained much attention of the various stakeholders associated with the large UK companies, however the same has been understated by the management of the organization (Lock, 2016). The maximum focus by the management on financial information disclosures indicates that, this is being attributed mainly because of requirements and reporting choices of stock exchange regulators and accounting standard setters that is being reflected in the financial statements issued by the companies from time to time (Healy & Palepu 2001). It has been revealed that the use strategic tool is very important, because it helps in assessment of future potential of an organization. With the emergence of this concept, the stakeholders of an organization have been moved from requiring that “give an account” that was mainly related with the financial statements, to requiring the business management to “provide social, environmental, and ethical account with combine information of financial attached to it” (Adams, 2004). Therefore, in order to enhance the reporting requirements and to improve the quality of reporting information, European Commission has released the guidelines and frameworks for disclosure of non-financial information related to environmental and social impact. These integrated reporting frameworks provide extensive benefits to the reporting organization as well as associated stakeholders by providing help to drive efficiency, hone strategy, improve competitiveness, and mitigate risks (Deloitte, 2011). Lock and Seele (2016) have gathered information from 237 CSR reports in order to conduct the quantitative analysis of European based organizations. In their study, they had compared the CSR reporting credibility in relation to other nations having legal mandate disclosure and they did not find major differences in their analysis. On the other hand Hąbek and Wolniak (2016) have similarly conducted study of disclosure mandate by collecting data of 507 firms based in European nations and in their study, they found that the firms who were facing a disclosure mandate was able to achieve the higher reporting quality scores.

Chapter-3: Methodology

This section is provided the details of methodology followed for collection and analysis of required data information for this research paper. The study is based on the quantitative information being collected from various annual reports and CSR reports of UK based and Europe based companies which were limited to financial year ending in 2019. Before taking the steps associated with the data collection, an extensive literature review was carried out in order to understand the different concepts and theories working behind inclusion of non-financial information in corporate reporting. The main purpose of this research paper is to examine various financial and non-financial (social and environmental) information, which are published by the corporate organizations in their annual reports.

3.0 Data collection Method

The methodology followed under this research paper in order to gather required data and information is done through secondary data collection method, wherein data are collected from published annual reports and other CSR reports of companies. From entire Europe, financial and non-financial data of major 40 companies are collected, which are operating in different industries in order to obtain the necessary information so that objectives of the research study can be achieved (Leventis, 2004). While collecting data with this secondary form of data collection method, there are few contexts were taken into account that was worked as structured guide for better collection of information. It was considered that, before introduction of regulations by European Commission, the business organizations were not taken into account the non-financial information while reporting and communication the annual data with their stakeholders and also did not considered non-financial information while taking the business and investment decisions (Dias-Sardinha, et al, 2007). The methodology earlier adopted by the organization and investors taking decisions without consideration of non-financial information would ultimately lead to worse decisions from overall society point of view. It was also considered that, the regulatory authority required the organizations as well as investors to consider the non-financial externalities that may lead to adverse impact on the society, and requires them to consider while making the decisions related to future working (Einhorn, 2007). As a consequence and mandate by regulatory authorities, the organizations were reporting the non-financial information along with financial information in their periodical as well as annual reporting. It was also considered that, the organizations and investors are taking the wider implications associated with their decision making, where it may possible that some decisions are changed over the period of time because of changes were taking place in scope, scale, timing, and the outcome of the decision making (Albertini, 2014). While collecting the data, it was considered that the investors and business management can take appropriate decisions based on quality information in form of financial as well as non-financial and able to give better social outcomes to the society at large. For collection of data, this simple form of communication has been chosen, because it is being easily available and most accessible with accurate information from all the listed organization publishing their annual reports time to time (Depoers, 2000). Annual reports published by the corporate organizations are most convenient and modern form of business communication where all the essential information is gathered for stakeholders, where it is possible that all the relevant financial and non-financial information incorporated (Beattie, 2005).

In order to make analysis easy and meaningful, the companies were categorized into two segments, one is large companies and another is small or medium size companies. While selecting the organizations from various industries, it was tried to give equal importance to all the types of industry segments, so that quality information can be collected that represent overall condition of the market.

3.1 Data analysis Method

Based on the collected information, an exploratory analysis has been made based on the information contained in the annual reports and different relevant web pages of companies whose annual reports are analyzed. This form of analysis has been chosen because under this methodology, most of the information would be easily available that is issued by large companies for large stakeholders publically (Caetano, 2015). Moreover, the information communicated by large companies through annual reports are most accurate and as per requirements of various laws and standards applicable from time to time (Linsley, 2006). After collecting the required data information from the annual reports and web pages, it was read and based on the common aspects of the information; the grouping of information was done in order to present the information more accurately (Emmanuel, et al, 2004). The different organizations parts of the studies have been categorized industry wise and various terminologies being used in their annual reports are presented in data analysis (Emmanuel. Moreover, while analyzing the data information based on various terminologies used, it was further categorized into four categories based on their main focus of importance; environmental focus, social focus, economic focus, and other focus.

A detailed analysis has been conducted on sustainability or CSR or similar comparable reports issued by the corporate organization along with their annual reports by UK companies. Annual reports and sustainability reports are collected and used issued during the period of 2015 to 2019. The reports of the selected organizations were systematically evaluated based on the criteria specified already for analysis purposes. The criteria for evaluation were classified majorly into two categories, one is related with material requirements and another is related with general quality of the reports. The reporting requirements which were considered as material criteria for evaluation purposes, includes various aspects such as; economic and management aspects, environmental and social aspects, products and services in which the organizations were dealing, as well as societal relationship of the organizations (Michelon, 2015). The general criteria defined for analysis purposes include; materiality of the information included in the reports, credibility of the information, communicative quality of the information, and comparability of the information.

In order to make detailed analysis of the collected data information, here we have used 10 major criteria for making evaluation of the non-financial information which were being further categorized into sub-criteria based on the nature of criteria defined. The criteria for evaluation specified for larger companies are majorly consisted of more than 42 individual criteria and general criteria outlined for overall evaluation of all the selected organizations, it were supplemented by sector-oriented specific criteria for major of the organizations (Góis, et al, 2015).

3.2 Sampling Technique

The actual evaluation process was done in several phases, starting from selection of companies from various industries and end with measurement of data based on the criteria specified for evaluation. As we know, it is expensive and time consuming task to gather data and information for any market research study in case if the entire population would require to be analyzed, therefore a sampling technique helps in shortening of data information in smart way, where research study can be completed effectively and within estimated period of time (Cabral, 2011). So, while making the selection of samples from the overall population, proper care was taken to give justification of all the relevant criteria specified for this research study purposes. Sample has been selected in such a way so that entire population can be represented in the research study and required information can be gathered so that research questions can be answered effectively. In light of the variables that impact the point of the research paper, the vast majority of the important research centers around improving the research’s targets by choosing the ideal arrangement of indicators and a fitting characterizing procedure for a specific information sample (Fassin, 2011). Notwithstanding, it tends to be seen that the joined impacts of highlight selection strategies and sampling methods have not yet gotten enough enthusiasm from researchers. Along these lines, this research plans to manufacture models to foresee the successful exposures of non-financial data by the recorded organizations of the UK that centers on the job of the component selection technique in relationship with various sampling decisions in improving the model’s presentation (Gupta, 2007). The significance of the investigation is stressed as the quantity of firms are not following the rule system gave by European Commission according to dispersal of non-financial data, while the quantity of research ventures happening is restricted around there.

3.4 Sample Size

By visiting the website of London Stock Exchange, an overview of top 100 FTSE companies were done and of that 40 companies are selected on random basis from different sectors that represent the major portion of the overall market. While selecting the organizations, the focus was made on equal distribution to different industry segments so that overall market analysis can be done. Sampling is an effective method, through which the overall opinion of wide range of companies and investors can be taken by making specific selection of group. Size of sample was defined as 40 percent of top FTSE companies considering that each sector would be represented by selected 4-5 organizations from each sector (Breton, 2009). There were some challenged found while making selection of sample, because although random sampling method was used for making selection of companies from overall population, however in order to understand the effectiveness of reporting and quantum of reporting information, each and every companies were required to be analyzed prima facie, so that proper justification can be made while making selection of sample. An improper selection of sample may leads to improper collection of information and with that an effective analysis cannot be made (Figge, 2002). So, there was a risk of improper selection of sample that might lead to entire research study in wrong direction and it might become difficult to answer the research questions properly. There was challenged also found in relation to length and clarity of contents of non-financial information, where it was necessary to compare the non-financial information reported by one organization with non-financial information reported by another organization within same industry.

Chapter-4: Analysis and Presentation of data

4.0  Analysis of collected data and information

The sample selected for this research study purpose is FTSE firms which are reporting under the International Financial Reporting Standards. This study also makes some key contributions with respect to the existing literature being already discussed in this regard. In the given analysis, an attempt has been made to understand that whether the sample selected firms are making voluntary disclosures of financial, social, and environmental information or whether it would be mandate for them to provide necessary information as provided under the applicable guidelines and framework for disclosures. In the this analysis, an attempt has been made to find the empirical evidences in relation to statistical information and quality of non-financial information to understand the legitimacy of the data provided on public platform. In most of the cases, it has been found that there is voluntarily organizations are providing non-financial information however there had been a qualifying underlying purpose for dissessmination of this kind of information. Moreover, under the mandatorily requirement environment, there are evidences of corroborates legitimacy theory being found that words similarly for all types of organizations. Additionally, while making analysis of the collected data information, we use novel method to understand whether under voluntary disclosures, the organizations are reporting information over and above beyond what is being required by mandate framework (Firer, et al, 2003). To empower us to distinguish willful revelations far beyond the necessities of the order structure for revelation of non-financial data, we planned a checklist for disclosure dependent on the overall necessities saw in this investigation. This agenda is complete and is totally reliant upon the rules’ ordered prerequisites. Any inconsistencies which may emerge between our checklist and those utilized by past researchers will be because of restrictive reactions (Benites, 2013). We avoided potential risk to guarantee that our checklist for disclosure was not really not the same as those delivered by any of the past researchers as these specialists were liable for the results inside our sample. The yearly report of each organization was assessed physically and close by a consistence research, we likewise noted noteworthy regions of exposure where firms detailed more detail than the standard required (Beattie, et al, 2004).

4.1 Financial information disclosure analysis

The content analyses of the financial figures have many different forms and have been adopted as the main research approach while making analysis of the financial information of the selected organizations. In order to make analysis of the financial information analysis, we have opted to make analysis of annual reports of the selected companies and financial statements that are part of the annual reports which are primary documents for all the stakeholders looking for necessary information for their decision making purposes. The level of completeness and consistency provided under the financial statements differentiate them from other forms of corporate communication particularly and therefore, it has been opted as primary sources of financial data information. However, while making analysis of the financial figures analysis, focus has been made on the content analysis rather than figures only in order to understand the objectives of defining of various items that are part of the financial statements. Various questions are defined in respect of different categories of items of financial statements as under:

Table-1: Checklist for financial information disclosure analysis

Categories of items of financial statements Number of questions
Statement of financial positionVarious categories of financial assets and liabilitiesFinancial assets and liabilities recorded at fair valueReclassification done of different assets or liabilitiesDerecognition done of different assets or liabilitiesProvision and allowances created for doubtful assets or liabilitiesCompound financial instruments part of derivativesCollateral used for different assets or liabilitiesDefaults or breaches done with respect to  different assets or liabilities   6 5 3 4 4 1 1 5
Statement of profit or lossVarious items used income and expenses categoriesVarious heads used for gains and losses   5 5
Statement of changes in equityVarious items used changes in balance of accountsVarious heads used for gains and losses   5 5
Other important disclosures of financial statementsDisclosures of accounting policies and types of policies definedDisclosures with respect to hedge accountingDisclosures with respect to fair value treatmentDisclosures of sub-total under each category   5 6 8 1
Nature and amount of risks involved in the financial instrumentsCredit risk of qualitative disclosuresCredit risk of quantitative disclosuresLiquidity risk of qualitative disclosuresLiquidity risk of quantitative disclosuresMarket risk of qualitative disclosuresMarket risk of quantitative disclosuresOther risks of qualitative disclosuresOther risks of quantitative disclosuresSensitivity analysis and further risk disclosures   5 1 5 1 5 1 6 4 5
Adoption of financial statements and exemptionsEarly adoption of financial statementsSpecial exemption provided from preparation of comparative information   1 1
Total 104

(Source: Developed by researchers)

While making analysis of the contents of financial statements, there are approaches have been followed, one is related with form oriented and another is meaning oriented. The form oriented approach relates with the amount of quantity of words however meaning oriented is focuses on underlying concepts in relation to observed texts that is part of the financial statements (Bubna, 2004). An assortment of approaches has been utilized to address concerns principally of impression the executives and legitimization. These include: investigations of positive/negative watchwords and expressions; examinations of intelligibility utilizing lists; investigations of expository procedures; examinations of lucidness and phonetic styles utilizing manual and modernized coding; investigations of other authentic strategies and visual pictures including charts, tables, graphs, pictures and the utilization of shading. Moreover, these techniques are now and then utilized in blend with one another (Gajewski, 2001).

Further financial information analysis include, the content analysis based on the checklist prepared with mainly two approaches. In the first approach, the annual reports of the companies have been analyzed from the audit perspectives where compliances are checked in relation to applicable accounting standards which is based on a checklist being prepared by taking into account the mandatory regulations (Bonsón, 2014). Another approach has tried to create agendas so as to research theories frequently connected with exactly testing hypothetical underpinnings, for example, authenticity hypothesis and impression the board yet additionally testing determinants of intentional and obligatory revelations. The analysis work ties in intimately with the already prepared checklist approach. We have utilized substance investigation and viably attempted a consistence survey in a similar way the same number of earlier review consistence contemplates, be that as it may, in this examination, we have not remarked on zones of non-consistence. Rather, we have recognized explicit territories where firms have given more detail than compulsorily required. Apparently, this is the main investigation of its sort and gives a new way to deal with the utilization of substance examination and furthermore the examination of hypothetical clarifications for corporate revelation.

4.2 Social and environmental disclosures analysis (non-financial information)

Here in this analysis, questions are designed to understand the extent to which the various organization selected under data collection procedure, provide accurate and fair reflection with respect to both negative as well as positive of reporting and disclosures of non-financial information.           Moreover, some raised worries that wording inside the enactment was not as state-of-the-art as it could be, implying that data isn’t constantly taken as a reasonable and exact impression of an association’s non-financial action. For example, a model was given comparable to business data which as of now utilizes wording around workers. By definition, this rejects those utilized through organizations and those on party time contracts which for ventures, for example, the cordiality exchange, can make up a huge extent of the workforce that are not as of now being remembered for non-financial revealing (Boodoo, 2016). The apparent effect of non-financial detailing guidelines changed, as did partner sees on the advantages of the reports, and their perspectives on the worth and value they can get from the reports. While partners comprehended and concurred with the justification behind the guidelines, to be specific to make organizations increasingly straightforward and energize better dynamic, most accepted that, since required non-financial detailing stays in its early stages, the prompt effects are difficult to measure. Various questions are defined in respect of different non-financial aspects as outlined below:

Table-2: Checklist for Non-financial information disclosure analysis

Area of responsibilities Measures adopted as internal dimension Number of questions prepared for evaluation
Health and safety of people Creation of healthy working conditions for all the workersCompliance to all the applicable UK and European legal frameworks and development of an internal normative framework for continues improvement of health of the people working for companyAdoption of complementary measures to improve the safety at workplaceAvailability of necessary certifications for various products or services, management of tangible assets and systems that can affect to health and safety measurements 3   2         4   2      
Human resource management Equality in payment criteria and gender equality in work allocationBalancing between work and personal lifeSufficient training and learning experienceProvision of scheme for profit sharing and human resource developmentJob security and retirement benefitsIncentives and non-financial benefitsNon-discriminatory practice of recruitment 3   2 2 3   4 5 3
Environment and natural resources usage policy Reduction of pollution and natural resource exploitationReduction of waste generationReduction of emissions of pollutantsDevelopment of waste management and depollutionDevelopment of alternative of energy generation sources 4   3 3 2   4
Business partners and consumers Promotion of entrepreneurshipPartnership with joint venturesAssistance to consumers for reporting their problems and other social responsibility activitiesAwareness campaign for consumers rights and their responsibilityThrives to provide ethical and ecological products and services 3 3 4   2   3  
Local society Taking concern about the water pollution, noise pollution, soil contamination, air emissions, and other environmental related issues that can harm lives of peopleProviding sponsorship for cultural and society benefits programsRecruitment of victims of exclusionProvisions and engagement of healthcare programs and seminars for poor peopleDonations and charitable activities for society 3       4   2 3   4
Global environmental concerns Promotion of social responsibilities of business organization as well local communities at national and international levelOrganization of programs and workshops for awareness about organic farming, development of energy alternatives, accelerated urbanization, etc. 3     5
Human rights Development of labor standards and for environmental protectionTaking appropriate actions in case of bribery and corruption practicesPromote the awareness about child labour and its adverse consequencesImplementation of code of conduct for human rights and for better working conditions 3   4   5   4
Total 104

(Source: Developed by researchers)

As we can see in the above prepared table, there are several questions are prepared in order to gather information related with the social and environmental responsibility actions of the selected organizations. The various questions are categorized into different segment wise so that contributions of various companies in segments can be analyzed with their economic and financial impacts. While making analysis of the contribution of the organization in disclosures of non-financial information, it has been analyzed from two perspectives, one is internal and another is external. The internal perspective focuses on actions taken by companies to develop and implement the necessary social and environment protection norms and regulations, and how it support to the health and safety of not only people working in the organization but outside people affected by the business of the organization. The external perspective focuses on how the organizations become more visible against their stakeholders and how they are promoting their relations with their outside stakeholders and overall communities and how much investment they are making for it.

Chapter-5: Discussion of Findings

By collecting information in form of answers to the questions designed for financial as well as non-financial information presentation by selected organization, an analysis has been made in order to find the answers to the research questions. Each of the above form of communication has its own value and having its own advantages and disadvantages from the stakeholders’ point of view depending on what sort of information they are looking for. There are various forms of communication tools used by the companies for making communication with their stakeholders depending upon the nature and type of information. A list of common types of documents used for business communication (including financial and non-financial information) is as under:

Table-3: Sort of documentation used for disclosures

Type of information disclosures Nature of information disclosures Sort of documentation used for disclosures
Written information Financial Information Financial statements issued as a part of annual reports or quarterly or similar type of reportsManagement report issued by board of managementInformation published on web pages of organizationInformation provided in form of social balanceIntegrated report issued by company from time to timeInformation provided on social networksInformation transmitted through email, proceedings, minutes, posters, etc.Information provided through balanced scorecardSocial responsibility reportSustainability report
Non-financial information Social responsibility reportSustainability reportDocuments issued for code of ethics and code of conductWelcome manual prepared for stakeholdersInformation provided on social networks, web pages, etc.Information transmitted through email, proceedings, minutes, posters, etc.Environmental balance reportContribution for social and environmental awareness programsRole and participation of company’s employees
Verbal information Financial information Gestures and facial expressionsInformation through radio or televisionsInformation in form of graphics or schematics
Non-financial information Gestures and facial expressionsInformation through radio or televisionsSymbolic information over the products of the companies

(Source: Developed by researchers)

The above discussed various types of sort of communication tools are used by companies in different circumstances and each form has its own advantages and disadvantages. All the above mentioned documents have been used for communication variety of information; some companies were focusing of quantity of information, some focusing on quality of information, some companies were also focusing formats and designing of documentation. The most reliable and widely used documents are financial statements of the organization, because these were being audited by independent accountant as well as information provided under similar structure of format, so that it was possible for us to make comparison easily. In financial statements, we can also find the non-financial information, related to items of environmental nature under the headings of current and non-current liabilities where particular provisions were created. However, the financial statements did not provide the direct visual of social responsibility of the organizations; rather it was found in notes supporting the financial statements of directors’ statements (Branco, 2008). The management report was also an effective communication tool for dissessmination of financial as well as non-financial information and includes diluted social responsibility and environmental information and also focusing on human capital information. In the recent time, the companies have used web pages and social networking as one of the important platform for disclosures of information in multiple ways. Other important findings are disclosed here in below chart:

Table-4: Important findings of disclosures by selected organizations

Chapter-6: Recommendations and Conclusions


There is huge demands have been placed by the stakeholders and regulatory authorities for disclosures of various information in the corporate reporting of the companies wherein the significant changes being took place in inclusion of financial and non-financial information is concerned. In order to assist the companies, for disclosures of non-financial information, the regulatory authorities such as European Commission should designed a uniform structure and framework for disclosure of information according to the changing demands from the stakeholders. Such guidelines and framework should assist the companies for inclusion of various matters as disclosed above, business model reporting, use of performance metrics, use of artificial intelligence and corporate reporting, use of communication tools for disclosures of information, and so on. The main purpose of reporting of non-financial information should be aligned with the disclosure of information related to how management of companies have used the resources of companies and performed, and not to advertise excessively. Similar to financial statement structure, there should be a uniform structure for disclosure of non-financial information, which can guide the stakeholders in understanding the information and them able to compare information issued by different companies from time to time.


The above analysis with respect to disclosure of financial and non-financial information by companies based in UK (FTSE 100 organizations) was done through authentic source based, by collecting the annual reports and other relevant information from web pages. The information discussed and evidences provided in annexures are source based from the annual reports of the companies and highlighting only relevant points that is part of this research paper. It is the aim of the research study to investigate the disclosure practices implemented by the UK companies where the special emphasis has been made on the financial and non-financial information that is part of the annual report, CSR report, or similar reports issued by the companies, however when we focus on the corporate communication used by the companies, we found some real obstacles to its realization, where the modern qualitative forms are not matching with the traditional form of financial statements and there is difficulties created for stakeholders in understanding the economic information.


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