Visual trends in the annual report: the case of Ericsson 1947-2016

Abstract

Purpose: Disclosure research has argued that visuals are increasingly used in annual reports as a way to increase the readability of the annual report, but comparatively little is known about diagrams compared to graphs and photographs. The purpose of this paper is to provide a historical account of visuals use in corporate disclosure, with an emphasis on diagrams, to show changes from the 1940s until present-day reporting. Design/methodology/approach: Visual research methods were applied to analyze how diagrams, photographs and graphs were used in 69 annual reports of the Swedish telecom company Ericsson. Findings: Photographs have been used with increasing frequency since the 1950s. Graph and diagram use has increased significantly since the 1990s while photograph use remained stable, suggesting that graphs and diagrams increasingly complement photographs for visually representing the organization in corporate disclosure. Factors explaining the case company's development include both internal (performance, individual preferences, shifting from a manufacturing-based strategy to a service-based strategy) and external (legislation, transformation of the telecom industry) aspects. Originality/value: Visual elements in annual reports are increasingly oriented toward immaterial representations of the organization's standings and identity and diagrams are increasingly used and contribute to this. This finding motivates further research about diagram use in corporate communication, such as how different diagram types convey accounting messages, and whether diagrams serve as impression management devices. For regulators, it will be important to follow the emerging trend of diagram use, since it is becoming part of reporting practice.

Readabilty in management reports: extension and good governance practices

“…The concern of some regulatory bodies like the SEC about the length of documents and their readability leads us to analyse whether the quantity of text and the quantity of visual elements that define their extension really affect their readability, that is, if these two characteristics of the documents affect readability. One the one hand, the shorter texts are easier to read (Loughran & McDonald, 2014) and, on the other hand, graphic resources, which are also expanding, (Beattie & Jones, 1997;Havemo, 2018) serve to "support the information and reasoning presented in paragraphs of a narrative nature" (CNMV, 2013, p. 35), both affecting readability.…”

Analyst Following, Country’s Financial Development, and the Selective Use of Graphical Information in Corporate Annual Reports

“…Fourth, by adding two additional control variables, we investigated whether the length of the whole annual report and of the annual review, where most of the KPI graphs are located, affect graphical reporting. Previous literature has shown that annual reports are growing in size (e.g., Ditlevsen, 2012; Havemo, 2018), with the amount of voluntary material growing faster than regulatory material (Beattie et al, 2008). The increase in voluntary disclosure could drive an increase in usage of KPI graphs.…”

“…Based on a set of general rules, they “visually display measured quantities by means of the combined use of points, lines, a coordinate system, numbers, symbols, words, shading and color” (Tufte, 2001, p. 9). The most common types of graphs are histograms, bar, pie, and line charts (Beattie & Jones, 2008; Havemo, 2018). Histograms and bar-charts are mainly used to compare discrete values, while line graphs to display continuous trends (Ying Hill & Milner, 2003).…”

Impression Management in Graphical Representation of Economic, Social, and Environmental Issues: An Empirical Study

“…Visual representation has a major role in managing readers' perceptions as graphs, charts, maps, diagrams, and tables are used to present performance-related information in reports [44]. Graphs are defined as "a collection of visual elements in size, placement, or shape to a quantitative amount, also named as charts" [45]. Pesci et al [46] suggested that graphs should be evaluated by observing their location in reports, reading of their captions, and analyzing the meaning of the visual component.…”