Company responses to demands for annual report changes
Accounting, Auditing & Accountability Journal
ISSN: 0951-3574
Article publication date: 23 August 2018
Issue publication date: 11 September 2018
Abstract
Purpose
The purpose of this paper is to examine how and the extent to which barriers to change inhibit new ideas about note disclosures to manifest themselves in annual reports.
Design/methodology/approach
The study employs regulation theory and draws on case studies in Denmark and the UK to understand compliance motivations and, on that basis, to identify the barriers to and enablers of changes to note disclosures in annual reports.
Findings
It is demonstrated how certain characteristics of the annual report preparation process can dampen the potential for change. It is also shown how preparer perceptions of oversight agents (auditors, enforcers, audit committees) have effects on disclosure behaviour. These characteristics appear to cause defensiveness among the actors involved in the process, inhibiting changes. In contrast, enablers are related to trust in regulatory enforcement, facilitation from enforcers, user orientation and shared understanding among functional groups involved in the preparation process.
Practical implications
The preparation of notes is susceptible to the influence of a range of factors, such as company politics, perceptions of enforcement styles and actors’ concerns about being blamed for inappropriate responses to regulation. These findings could be considered by regulators, auditors and preparers in enhancing understanding of their respective roles in the annual report preparation process.
Originality/value
This study illuminates the conditions that facilitate change when new ideas are introduced to a highly normative and detailed field. The study contributes to previous research by providing a fieldwork-based analysis of the practices, judgements, discussions and actors involved in the preparation of note disclosures.
Keywords
Acknowledgements
This paper has benefited from comments provided by two anonymous reviewers as well as from helpful assistance and comments provided by David Vestengen Hopkins, Hans Peter Lindegård Buhrkal, Jacob Mærsk, Morten Lindtner and participants at the Better Business Reporting workshop in Copenhagen and the BIS Narrative Reporting Forum in London, The authors acknowledge financial support from KPMG.
Citation
Johansen, T.R. and Plenborg, T. (2018), "Company responses to demands for annual report changes", Accounting, Auditing & Accountability Journal, Vol. 31 No. 6, pp. 1593-1617. https://doi.org/10.1108/AAAJ-02-2016-2419
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited