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Financial Times: Slim documents almost certainly useless

Published: January 24 2008 02:00 | Last updated: January 24 2008 02:00

From Mr Dick Martin.

Sir, D.R. Myddelton argues that the idea that any ordinary shareholder could use the bulky annual reports of GlaxoSmithKline, British American Tobacco and Royal Dutch Shell to help them make decisions is “ludicrous”.

His argument patronises those shareholders who are still lucky enough to receive these weighty tomes, which are essential reading for a full understanding of the companies in which they invest. Many companies send out the contemptible “annual review”, a slim document which fulfils the professor’s call for brevity, but which often lacks even a consolidated cash flow statement, and is certainly useless as a guide to decision-making.

Shortening the full annual reports would risk creating moral hazard among boards of directors by making it easier for them to leave out possibly inconvenient information that shareholders have every right to receive. Companies’ increasing attempts to wean shareholders off hard copy annual reports and on to their electronic equivalents are bad enough, though doubtless advantageous for printing costs and rain forests. But let us not further dumb down the investment process by shortening annual reports.

Dick Martin,
Tonbridge, Kent
Copyright The Financial Times Limited 2008

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