Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - The use and abuse of graphs in annual reports
T2 - a theoretical framework and an empirical study
AU - Beattie, Vivien
AU - Jones, Mike
PY - 1992
Y1 - 1992
N2 - This study investigates the use and abuse of graphs in external financial reporting. From an analysis of the annual reports of 240 large UK companies for the year ended 1989 we document the nature and extent of graph usage. The average number of graphs per annual report is 5.9, with 65% of companies graphing at least one key financial variable. Drawing on modern theories of graphical perception we identify selectivity in the use of graphs, and non-compliance with the principles of graph construction, as potential distortions in the communication process. We find that companies with ‘good’ performance are significantly more likely to use financial graphs. Material measurement distortions occur in 30% of these graphs, with the underlying numerical data being exaggerated by an average of 10.7%. We conclude that auditors' and directors' responsibilities in this area should be made more explicit.
AB - This study investigates the use and abuse of graphs in external financial reporting. From an analysis of the annual reports of 240 large UK companies for the year ended 1989 we document the nature and extent of graph usage. The average number of graphs per annual report is 5.9, with 65% of companies graphing at least one key financial variable. Drawing on modern theories of graphical perception we identify selectivity in the use of graphs, and non-compliance with the principles of graph construction, as potential distortions in the communication process. We find that companies with ‘good’ performance are significantly more likely to use financial graphs. Material measurement distortions occur in 30% of these graphs, with the underlying numerical data being exaggerated by an average of 10.7%. We conclude that auditors' and directors' responsibilities in this area should be made more explicit.
U2 - 10.1080/00014788.1992.9729446
DO - 10.1080/00014788.1992.9729446
M3 - Journal article
VL - 22
SP - 291
EP - 303
JO - Accounting and Business Research
JF - Accounting and Business Research
SN - 0001-4788
IS - 88
ER -