Contextual Non-financial Information Analysis of Annual Reports
Contextual Non-financial Information Analysis of Annual Reports

Author(s): Zuzana Kubaščíková, Miloš Tumpach, Zuzana Juhászová, Bazhan TUREBEKOVA, Saule SAPARBAYEVA
Subject(s): Business Economy / Management, Accounting - Business Administration
Published by: Masarykova univerzita nakladatelství
Keywords: sentiment analysis; annual report; narrative data;
Summary/Abstract: When assessing a firm‘s current and future financial performance, various information sources are available to interested parties. Annual reports, within which companies reveal their activities, results, developments and trends, are one of the most important information sources. Such a report contains, alongside financial data, narrative disclosure of contextual non-financial information providing broader insight into a company´s business and performance. With the increasing average length of narratives in recent years we may also observe the growing interest of investors or analysts in information revealed here as a means of supporting their decisions. The aim of this paper is to accept or reject the claims that non-financial "narrative" data could also be used for the assessment of the financial position and financial performance of a company. Our study confirms the assumption that qualitative data expressed in annual report narratives preceded change in quantitative financial data, and therefore could be used for the prediction of company financial performance. However, as qualitative and quantitative data complement and support each other they should be considered simultaneously by the annual report users, in order for them to be able to make the right decisions. Ergo, we recommend that investors and other annual report users examine narratives alongside individual financial situations and other information sources, in order to get a complete picture of the potential future developments of a company’s financial performance. This would consequently contribute to their ability to make the right investment decisions and enable them to appraise the value of their funds.

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