Corporate Reporting of Non-Financial Leading Indicators of Economic Performance and Sustainability

Abstract

The call for disclosure of non-financial information has grown in response to the aware-ness that financial statements omit salient information about the company (Adams et al. 2011). This study follows earlier studies of non-financial disclosures of governance and corporate social responsibility information (Holder-Webb et al. 2008, 2009) and examines the public voluntary disclosure of a set of leading indicators of economic performance and sustainability of earnings provided during 2004 by a sample of 50 publicly traded firms across five industries. The results indicate that, among the sample firms, there remains a lack of rigorous and expansive disclosure of this type of information and that considerable variability exists in disclosure practice based on both industry and size. For example, companies disclose a wide variety of non-financial information both through mandatory filings such as 10-Ks and through alternative sources such as investor promotion materials and company websites, with the most frequent types of disclosures being concerned with information pertaining to market share and innovation. We conclude by discussing the role of this study within recent developments in integrative reporting (Adams et al. 2011) and suggest that perhaps these types of disclosures should be encouraged to receive some assurance services.

Keywords: Corporate Disclosure, Non-financial Information, Leading Indicators, Competitiveness Information

JEL Classification: M40, M41, M45, M46