The narrative report is a collection of information used to represent a company’s business, its market position, the used strategy, the performance and the future prospect. Occurred events, different detail and descriptions are usually the main focus of narrative reporting. The narrative report assign the presenter of the company to put the occurred events, that lead to any kind of compilation or problem, in a certain order. The main body of the essay will include a critical discussion of some key characteristics required for a good narrative report to be produced. It will also include critical discussion for the usefulness of narrative reports in the decision making of managers and shareholders. There is also a description of some of the most important characteristics for producing a good annual report. The public limited company used as an example for supporting the discussion in the essay is Anheuser-Busch InBev. The company is leader in beverage and brewing in the world with more than 25 percent global market share and as of March 2012 it is the largest fast-moving consumer goods company by firm value. (Anheuser-Busch InBev 2012 Annual Report)
The conducting of multiple studies in the last years provides us with information about the usefulness of corporate annual reports for investors. The evidences developed after the studies are conflicting one to each other, since they were conducted only among individual investors. (Anderson, 2012) The next sentences include discussion on the different findings obtained from the studies, such as investment objectives, information sources, readership and importance of sections contained in corporate annual reports, the desire for additional information and others.
The investment objectives include an economic problem which is facing investor’s ability to find acceptable schemes in a long term period of time. The reason for this problem to emerge is that personal resources are required in order to acquire ordinary shares. This on the other hand is accompanied with high level of expectancy for income in a long term time. Dividend income and capital gain are considered with equal importance by investors. (Anderson, 2012)
A distinguishing mark for the usefulness of the corporate annual report is its usage as information recourse when investors make the decision to buy, sell or hold shares. Another source, for receiving information for the company’s status, investors are using is the company visits they make. Visiting the company is considered as a useful information resource because of the ability to reach any kind of information first before the information is disclosed to other investors. This promotes the opportunity for higher profit for the visiting investors. (Anderson, 2012)
For investors the most important sections of the annual report are the once affecting their investment decisions. The statement for financial position, profit and loss statements, notes to the accounts and chairman’s address...