Stories speak louder than numbers: evidence from annual reports

Purpose This study aims to identify the possible red flags of potential financial irregularities in the annual reports. Design/methodology/approach The study adopted a qualitative approach to understand the possible red flags in the annual report. Semi-structured in-depth interviews with senior executives, forensic auditors, regulators and banking and financial services academicians helped gain explorative insights. Findings The findings propose a comprehensive framework for understanding the possible red flags in the annual report, which may provide early warning signals to the TMT to take timely action. Practical implications The study offers a step-by-step approach to detecting red flags, enabling timely interventions and more effective risk management by relevant stakeholders. Originality/value The paper contributes to the limited literature by using narrative sections of publicly available financial data to identify possible red flags. It offers a distinctive addition to the previous studies by focusing on the practical perspectives of professionals in auditing, accounting, forensics, regulation and academia.