As all good golfers know, less is often more. Might the same be true when it comes to financial reporting? The page count inflation of company reporting over the past two decades has been staggering. Back in the mid-1990s the typical report and account was fewer than 100 pages; this spring’s annual report season saw most major companies publish weighty tomes, often more than 250 pages.
Putting aside the environmental damage from tree felling or the resulting back conditions afflicting an army of postal workers, has all this extra disclosure actually helped stakeholders better understand the businesses? Does more disclosure reflect a genuinely more complicated world, does it merely reveal the complexities that were always there, or is it simply the regulatory and accounting world gone mad?
Perhaps the greatest champion of this “disclosure explosion” are banks. For example, 25 years ago Deutsche Bank’s annual report was under 100 pages (including two pages dedicated to their art collection). Of course banks today are big and complicated, and so one might expect their disclosure to also be big and complicated. Yet with Deutsche’s 2015 annual report running to more than 600 pages, it is right to ask whether such volume is helping or hindering stakeholders to understand what’s going on. And not only are there lots of words; any reader not familiar with AFS, CDR, CPR, CVA, DRE, DVA, EAD, FVA, IMM, LCR, LGD, MREL, NQH, NSFR, SFT, SNLP or TLAC (just to choose a few examples) will struggle to comprehend many of the issues.