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INTEGRATED NARRATIVE DISCLOSURE - Essay Example
Finance & Accounting
Pages 4 (1004 words)
Integrated Narrative Disclosure Name Institution Integrated Narrative Disclosure Narrative reporting refers to the non-financial data included in yearly reports to give an extensive and meaningful picture of a firm’s business, its strategy, market position, performance, as well as future prospects…
This inevitably gives rise to a better understanding to investors and improves relationships between stakeholders. In addition, the underlying procedure needed to generate this information can also improve governance and enhance board effectiveness. A more important reason why firms embrace narrative reporting is that it is not a burden, rather an opportunity, which when used appropriately can act as a basis for developing real competitive advantage. According to Brennan, Pierce & Encarna, (2000), narrative disclosure is essential in effective communication in organizational audience, inclusive of stakeholders, shareholders, and the entire society. For instance, corporate narrative records are used to give an account of managerial decisions and actions, to notify shareholders on strategies, to institute organizational reputation and identity, to influence organizational audiences concerning the legality of a firm, to persuade shareholders on the benefits of a takeover or merger. According to the Financial Reporting Council, (FRC), the most vital disclosures for shareholders are: sporting out the most critical risks and how to manage them; an explanation of the monetary position and financial results; a blueprint of future prospects and plans; and a description of the business model. ...
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