Perception of the Usefulness of Annual Reports and Other Information by Individual Investors in India

Annual reports are the most important sources of information regarding the performance and the sustainability of the company and contains vital information of the company. All limited companies have to publish and distribute their annual reports to the shareholders within a stipulated time period for review. This study reports the results of a survey of individual investors in India with respect to their perception of information usefulness of annual reports. It is an attempt to find out whether current practices satisfy users' needs of information and the extent to which these needs have been satisfied by the current disclosure practices of Indian companies. A survey questionnaire was used to explore whether the financial reports published by Indian firms were relevant to the needs of their users and to identify the disclosure items they perceived as important. Of the 500 questionnaires distributed to major external users of financial reports, 308 were completely filled in all respects and where hence considered for the study. The results indicate that users consider corporate annual reports to be the most important source of information. However, the level of corporate financial disclosure in India does not provide sufficient information to the users. The users also nominated several areas of concerns, including delays in the availability of annual reports, the lack of creditability of financial information, and the non-accessibility of financial reports