Preparers’ Construction of Users’ Information Needs in Corporate Reporting: A Case Study

Figures & data

Table 1. Interviews with individuals involved in Siemens’ annual report restructuring

Label	Position/department (during annual report restructuring project)	Date of interview	Duration (minutes)
CR1	Corporate Reporting	06 December 2017	152
CR2	Corporate Reporting	15 December 2017	100
CC1	Corporate Communications	02 February 2018	63
Aud1	Auditor Partner*	05 February 2018	63
Aud2	Auditor Partner*	05 February 2018	63
Aud3	Auditor Partner*	05 February 2018	63
Aud4	Auditor Senior Manager*	05 February 2018	63
Legal1	Legal^§	07 February 2018	60
Legal2	Legal^§	07 February 2018	60
IR1	Investor Relations	06 March 2018	60
CR3	Corporate Reporting	19 March 2018	56
CR4	Corporate Reporting	23 March 2018	51
CR5	Corporate Reporting	28 May 2018	36
CR6	Corporate Reporting	13 June 2018	38
CR7	Corporate Reporting	25 July 2018	50
IR2	Investor Relations	27 September 2018	18
Sust1	Sustainability	04 October 2018	44
CR8	Corporate Reporting	22 October 2018	40
CR1	Corporate Reporting	19 December 2018	102

Note: Table 1 summarizes our interviews with individuals involved in Siemens’ annual report restructuring. Interviews are listed in chronological order; * and ^§ mark jointly conducted interviews. The first column lists the labels used to quote from the interviews throughout the paper. These data are explained in more detail in sections 3.2 and 3.3; they are analyzed in section 5.

Table 2. Articles and conference presentations by Siemens personnel

Label	Reference
Panel A. Articles authored by Siemens personnel
T2015	Thomas, R. P. (2015). In medias res – dem Adressaten zuliebe. [English: ‘In medias res – for the sake of the user.’] Die Wirtschaftspr$\ddot{u}$fung, 68(15), 1.
T2016	Thomas, R. P. (2016). Die Nadel ohne den Heuhaufen. [English: ‘The needle without the haystack.’] Frankfurter Allgemeine Zeitung (FAZ). (84), 18.
TSW2016	Thomas, R. P., Schmitz, J., & Wagner, J. M. (2016). Adressatengerechte Kapitalmarktkommunikation als unternehmensindividuelle Managementverantwortung. [English: ‘Targeted capital market communication as a company-specific management responsibility.’] Schmalenbachs Zeitschrift f$\ddot{u}$r betriebswirtschaftliche Forschung, 68(4), 447–473.
WMK2018	Wagner, J. M., Mayer, M., & Kubessa, D. (2018). Adressatengerechte Finanzberichterstattung im Lichte der CSR-Berichtspflichten. [English: ‘Targeted financial reporting in the light of CSR reporting requirements.’] Die Wirtschaftspr$\ddot{u}$fung, 935–941.
W2019	Wagner, J. M. (2019). Effectiveness and Efficiency of Disclosure: A Preparer's Perspective. Schmalenbach Business Review, 71(2), 271–278.
Panel B. Public conference presentations held by Siemens personnel
P-W2015	Wagner, J. M. (2015). Disclosure Overload im Geschäftsbericht. [English: ‘Disclosure Overload in the annual report.’] Presentation at „Corporate Reporting 4.0 – Trends und Perspektiven in der externen Unternehmensberichterstattung: integriert, reguliert, effizient und transparent?,” Frankfurt am Main, 18 May 2015.
P-M2015	Mayer, M. (2015). Neugestaltung der Finanzkommunikation von Siemens. [English: ‘Restructuring of Siemens’ financial communication.’] Presentation at “Siemens Research Day – Campus meets Corporate Accounting and Controlling”, Munich, 2 July 2015.
P-S2015	Schmitz, J. (2015). Weniger ist mehr! – Der Siemens-Ansatz f$\ddot{u}$r einen fokussierten Geschäftsbericht. [English: ‘Less is more! – The Siemens approach to a focused annual report.’] Presentation at “9. Berliner Bilanz Forum”, Berlin, 23 November 2015.
P-T2016	Thomas, R. P. (2016). Adressatengerechte Kapitalmarktkommunikation. [English: ‘Targeted capital market communication.’] Presentation at “Schmalenbach-Tagung 2016”, Cologne, 28 April 2016.
P-S2016	Schmitz, J. (2016). Financial Reporting – “Breaking the Boilerplate”. Presentation at “Joint International Conference of Journal of International Accounting Research and Accounting, Organizations and Society”, Augsburg, 8 July 2016.
P-W2016a	Wagner, J. M. (2016b). Wie viel Disclosure ist im Geschäftsbericht unter Kosten-Nutzen-Abwägung zielf$\ddot{u}$hrend? [English: ‘How much disclosure is expedient in the annual report, given cost-benefit considerations?’] Presentation at “IFRS-Kongress 2016“, Berlin, 8 September 2016.
P-W2016b	Wagner, J. M. (2016b). Transparenz in der Unternehmensberichterstattung. [English: ‘Transparency in Corporate Reporting.’] Presentation at “PwC Expertenforum“, 20 September 2016.

Note: Table 2 provides full bibliographical information for articles authored (Panel A) and conference presentations held (Panel B) by Siemens personnel about the annual report restructuring. These data are explained in more detail in section 3.2 and analyzed in section 5.

Table 3. Siemens’ annual reports from 1998 to 2020

Label	Year	Primary financial statements	Notes	Management report	Mandatory other	Voluntary	Total
		pages	pages	pages	pages	pages	pages
AR1998	1998	4	22	18	4	44	92
AR1999	1999	9	23	16	4	48	100
AR2000	2000	10	30	17	5	46	108
AR2001	2001	10	40	21	7	48	126
AR2002	2002	10	42	38	14	46	150
AR2003	2003	10	66	48	22	56	202
AR2004	2004	10	68	40	24	48	190
AR2005	2005	10	68	46	28	80	232
AR2006	2006	10	78	52	27	93	260
AR2007	2007	10	112	92	35	87	336
AR2008	2008	8	94	70	38	120	330
AR2009	2009	8	88	78	36	112	322
AR2010	2010	9	98	98	36	103	344
AR2011	2011	7	106	101	35	139	388
AR2012	2012	7	90	86	36	125	344
AR2013	2013	7	88	98	48	131	372
AR2014	2014	7	76	76	49	140	348
AR2015	2015	7	57	56	15	5	140
AR2016	2016	7	57	52	16	6	138
AR2017	2017	7	61	56	24	4	152
AR2018	2018	7	63	60	26	6	162
AR2019	2019	7	65	74	25	7	178
AR2020	2020	8	69	85	34	8	204

Note: Table 3 reports the page counts of the different main sections within Siemens’ annual reports for the years 1998 through 2020. We distinguish between five elements: (1) the primary financial statements (income statement, statement of comprehensive income, balance sheet, statement of changes in shareholders’ equity, and statement of cash flows); (2) the notes to the financial statements including, when contained in the annual report, the mandatory list of subsidiaries; (3) the combined management report (excluding the voluntary sustainability and strategy sections); (4) mandatory other information; and (5) voluntary information. Section 4.1 describes the underlying reporting requirements in more detail, and also explains Siemens’ distinction between the voluntary ‘Book 1’ of the annual report, and the largely mandatory ‘Book 2.’

Figure 1. Development of Siemens’ annual report length over time (1998–2020).

Note: Figure 1 visualizes the information in Table 3, which reports the page counts of the different main sections within Siemens’ annual reports for the years 1998 through 2020. We distinguish between five elements: (1) the primary financial statements (income statement, statement of comprehensive income, balance sheet, statement of changes in shareholders’ equity, and statement of cash flows); (2) the notes to the financial statements including, when contained in the annual report, the mandatory list of subsidiaries; (3) the combined management report (excluding the voluntary sustainability and strategy sections); (4) mandatory other information; and (5) voluntary information. The vertical line demarcates the beginning of 2015, the year of Siemens’ first annual report after the annual report restructuring. Section 4.1 describes the underlying reporting requirements in more detail, and also explains Siemens’ distinction between the voluntary ‘Book 1’ of the annual report, and the largely mandatory ‘Book 2.’

Table 4. Media articles authored by parties external to Siemens

Label	Authors’ stance towards Siemens’ annual report restructuring	Article reference
ZW2017	Accounting professor Henning Zülch provides a detailed critique of Siemens’ annual report restructuring, highlighting some positive (removal of information on past share price movement) but mostly negative aspects (including the exclusion of large parts of the strategy report). The authors relate Siemens’ approach to what they call Siemens’ misconception of users’ perspective on the disclosure overload problem. In their view, distributing information elements through several communication channels (in addition to the annual report) increases users’ search costs.	Zülch, H., & Weuster, C. W. (2017). Das Disclosure Problem. [English: ‘The disclosure problem.’] Zeitschrift f$\ddot{u}$r Kapitalmarktorientierte Rechnungslegung. 2017, 350–351.
E2018	Edgar Ernst, president and head of enforcement of Germany's Financial Reporting Enforcement Panel, articulates skepticism about several firms’ trend towards ‘leaner annual reports.’ For example, he asks whether reducing the amount of information might also impair the quality of information, and how preparers could know what information users do, in fact, consider relevant.	Ernst, E. (2018). Schlanker Geschäftsbericht. [English: ‘A lean annual report.’] Betriebs-Berater. 2018, I.
B2016a	Siemens highlighted as ‘negative pioneer’ (‘negativer Vorreiter’) in the title of a report on the results of the annual report contest Der Beste Geschäftsbericht for 2015. Reasons include ‘radical cuts of valuable information.’	Bilanz (2016). Geschäftsberichte: Siemens als negativer Vorreiter. [English: ‘Annual reports: Siemens as a negative pioneer.’] Bilanz. 2016.
B2016b	Siemens placed 26 out of 30 among Germany's 30 largest firms in the annual report contest Investors’ Darling for 2015. The article highlights Siemens as having ‘dwarfed’ its annual report ‘at the expense of transparency,’ including by eliminating the capital market and strategy sections. Siemens’ volume reduction is viewed as being ‘too radical’ and jeopardizing Germany's underdeveloped shareholder culture. One jury member, a noted capital market expert, is on record saying: ‘Investors are perfectly capable of picking out the information they need themselves. But there must be something to pick out.’	Böschen, M. (2016). Hauptsache, Kapital gesichert. [English: ‘Main thing: Capital secured.’] manager magazin. 2016, issue 10, 116 et seqq.
B2017	Siemens placed 30 out of 30 among Germany's 30 largest firms in the annual report contest Der Beste Geschäftsbericht for 2016. The article highlights Siemens as having imposed an ‘information diet on its shareholders’ as well as missing information about employees.	Bilanz (2017). Wer informiert seine Aktionäre am besten? [English: ‘Who's best at informing their shareholders?’] Bilanz. 2017.

Note: Table 4 provides summaries and full bibliographical information for media articles by authors external to Siemens about Siemens’ annual report restructuring. These data, including the selection criteria, are explained in more detail in section 3.2 and analyzed in section 5.4.

Table 5. Interviews with peer firms’ Chief Accounting Officers (CAOs)

Label	Industry	Peer firm CAO's stance towards Siemens’ annual report restructuring	Change in peer firm's annual report volume (2016 vs 2014; %)
Peer1	Real estate	Positive; CAO considered his/her firm an ‘imitator,’ although audit committee chair and CFO are less enthusiastic	8.6
Peer2	Utility	Positive; considered his/her firm a ‘latent imitator’ that has not yet implemented (lack of time/resources; low priority)	−10.7
Peer3	Software	Interested; considered his/her firm a ‘pioneer’ concurrent with Siemens, but with the strategy of developing the annual report into a one-stop-shop for all stakeholders	−7.0
Peer5	Automotive	Mostly positive; noted Siemens ‘active marketing’ of their project; pursued their own, less ‘radical’ restructuring project concurrently with Siemens	11.3
Peer4	Automotive	Noted the Siemens project due to the Siemens’ CFO's public communication; skeptical; considered her firm ‘a cautiously interested observer’ that is ‘less mature’ than Siemens and hence worried more about legitimacy	−10.2
Peer6	Consumer products	Mostly negative; did not consider imitating Siemens (‘zero reading pleasure,’ ‘mere compliance exercise’)	2.0
Peer1 through Peer 6 (mean)			−1.5%
Siemens			−60.3%

Note: Table 5 summarizes interviews conducted with peer firms’ Chief Accounting Officers (CAOs) about Siemens’ annual report restructuring. These data are explained in more detail in section 3.2 and analyzed in section 5.4.