The Relevance of Annual Reports – The Use of Annual Reports in Investment and Finance Decisions in a Developing Country

Fatima Anwar, Saira Anwar, Abdul Mannan

Abstract


Making an informed decision is always the toughest task for any investor, Financial Analyst or Creditor. There are certain ways which are adapted by investors, Financial Analysts and Creditors in general to make a right choice and decision which later prove itself as worthy in terms of profit and loss.There is no one criteria which are being used by various stakeholders who perform the investment and finance decisions. From market trends to stock exchange information, every individual or groups rely on their own sources and their own way of dealing with situations and making decisions.In today’s arena annual reports provides information which can be used not only for future long term decisions but can also provide short term benefits. These can also help in diagnosing the company current profile, its economic and financial performance, risks and the value it will yield to the people who will get involved with the company. Looking at the data provided in these reports the decision making process can be standardized, monitored and may also be controlled.This study is an attempt to avail the benefits provided by annual reports and the information it has for its users. The current paper analyses the use and effectiveness of Annual reports and the help which they yield to Financial Analysts, Creditors and Investors for their decisions and how much reliance they can have on Annual reports for Investment and Finance Decisions. This study is both empirical and descriptive in nature and not only perform the statistical testing of data collected from a developing country’s (Pakistan for current case) investors, creditors and financial analysts but will suggest factors that will lead investors and creditors of developing country to make an informed decision by the use of annual reports.The results after doing statistical analysis indicate that Annual reports is not only useful for all user categories but is also a much relied upon tool for investment and finance decisions.

Keywords: Finance Decisions, Investment Decisions, Annual Reports, Financial Statements


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