The EU Issuers’ Accounting Disclosure Regime and Investors’ Information Needs. The Essential Role of Narrative Reporting

32 Pages Posted: 21 Jul 2017 Last revised: 6 Sep 2018

See all articles by Giovanni Strampelli

Giovanni Strampelli

Bocconi University - Department of Law

Date Written: July 15, 2017

Abstract

Within the EU investor protection framework, issuers are required to provide different investor groups with relevant information. Nevertheless, the issuers’ accounting regime seems to be inconsistent with this regulatory approach. Due to their ever increasing complexity, IAS/IFRS are not suitable to meet investors’ needs and can lead to an information overload, to which also sophisticated institutional investors are exposed. The article looks at the UK “strategic report” model and argues that the narrative component of financial reports can play a key role in rendering financial reports more informative and more suited to meeting information needs of different groups of users by diversifying information directed at sophisticated and unsophisticated investors. The article outlines the framework of a possible EU (more) harmonized framework in the area of narrative reporting, arguing that the ESMA can foster harmonization by providing guidelines on the enforcement of narrative reporting and (following the example of the Financial Reporting Council) promoting proactive activities aimed at developing guidance and recommendations on the contents and format of narrative reporting.

Keywords: Investors’ protection, IAS/IFRS, Accounting Directive, Narrative Reporting, Strategic Report, non-financial disclosure.]

JEL Classification: K22, M41

Suggested Citation

Strampelli, Giovanni, The EU Issuers’ Accounting Disclosure Regime and Investors’ Information Needs. The Essential Role of Narrative Reporting (July 15, 2017). Bocconi University Legal Studies Research Paper Series No. 3003743; European Business Organization Law Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3003743 or http://dx.doi.org/10.2139/ssrn.3003743

Giovanni Strampelli (Contact Author)

Bocconi University - Department of Law ( email )

Via Roentgen, 1
Milan, 20136
Italy

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