Assessing the Efficacy of Corporate Disclosures in Fulfilling Stakeholders’ Information Needs: A Thematic Analysis

The main objective of any capital market regulatory system is to improve information transparency. Corporate disclosures, which include both financial and narrative information, are the most reliable sources for this purpose. Clear presentation of such information helps reduce information asymmetry. This study examines the themes in the Management Discussion and Analysis (MD&A) sections of annual reports for financial sector companies in 2017–2018 and compares them with the Jenkins report (1991) recommendations to improve nonfinancial disclosures. The study investigates whether these themes meet users’ information requirements and finds that the MD&A sections often fail to provide the necessary forward-looking information and management analysis of firm and segment performance. Additionally, the readability of the reports does not significantly enhance the fulfillment of users’ information needs. The study also explores whether the themes in the MD&A differ based on firm performance and finds a positive relationship between the disclosure of business descriptions, financial information, management and shareholder information, and firm value. Given these unmet information needs, the research highlights the importance of establishing a governance system to ensure the quality of corporate disclosures. JEL Codes: G14, G2, G34