Annual Reports add 70% to perceptions of stock value

March 12, 2018

Well designed reports increase value

Research finds a well designed Annual Report increases pride of ownership for a company and this pride increases valuation.

A company’s annual report communicates the information about the company and becomes the primary source of information about a company’s activities and strategies. A Good Practice Guide (May 2008) states the primary purpose of the annual report is accountability, particularly to shareholders and or members. The emergence of corporate social responsibility and sustainability reports are examples of non- compulsory reporting. They are using them to enhance market knowledge and understanding of their strategies and performance.

I had the opportunity to get my hands on and read the report written by Assistant Professor Suzanne Shu, it was a paper she co-authored regarding the advantages to companies who turn out aesthetically pleasing annual reports. The crux of their findings is that, while we would like to believe that only the content of a document like a corporate annual report should matter, those companies who invest in the look and feel of their annual reports actually increase the valuation of their companies.

Townsend and Shu conducted three studies – one with finance students, one with members of the general population and one with more experienced investors.

Respondents in all three studies indicated that the design of a firm’s annual report would be of little significance in their valuation of a company.

However, after reviewing the first few pages and/or a sampling of annual reports, participants rated firms with more attractive reports higher than those with less attractive reports, the researchers say.

A podcast of Professor Shu discussing these findings was recently released. I am happy to share it with you if would like to learn more. Drop me a line and I will send it to you.

She told the UCLA Anderson Blog. “We suspected that the aesthetics mattered regarding financial products, even if consumers were not conscious of it,”

“It has to do with risk-taking. People who saw nicer aesthetics were more likely to invest. Once you feel affiliated with aesthetics, you can build your self-affirmation. You become more open to arguments in favour of investing in that company.”

Shu’s message to marketers at financial services companies is clear.

“This actually makes their lives easier. Your bosses don’t want to spend extra money on annual reports, but adding that extra colour, graphic element and design aesthetic to the annual report boosts profits. If you invest a little more, push towards higher aesthetics, it gives you an immediate payoff.”

We’ve talked at length about why annual reports are such an important piece of content for brands. They don’t just satisfy a legal requirement; they are a bold statement about who you are, what you do, and how you are succeeding. When executed effectively, they can promote your brand in ways you might not have imagined.

Contact me on to learn more about how we can give your next annual report a story, make it aesthetically pleasing therefore creating better investments opportunities.