Black Sun’s latest research report examines the case for real business benefit, behind the practice of company reporting.  The report reveals that over three-quarters of senior executives, from FTSE 350 companies, reported a benefit in performance management, from increased transparency in their narrative reporting.

Black Sun, working in conjunction with the London Business School, asked 50 senior executives from the FTSE 350, whether their companies had benefited from the requirement to increase transparency and disclosure, in the narrative section of their annual reports. Key findings reveal that benefits come as much from the process of increasing disclosure and transparency as from the end statutory product itself – the annual report.

An overwhelming majority of companies saw improvements in performance management, in addition to positive impacts in risk-management systems, internal coordination and communications, as a result of the process to improve transparency and disclosure.

“The demand and benefit of increased transparency in the narrative sections of the annual report for investors, analysts, regulators and lobbyists are well understood and documented; however, little is known about how companies themselves feel about the move towards increased transparency,” says David Christopherson, Managing Director of Black Sun Plc.

“Our research reveals compelling evidence, demonstrating that businesses are better run as a result of this process. There is greater alignment among board members, a more integrated view of the company at all levels of management, greater input from middle levels of management in decision-making and increased alignment between external and internal reporting, with employees better informed about the company.”

In addition, the report revealed that 92% of respondents felt that increased transparency in the narratives has improved investors and analysts’ understanding of the company’s strategy and performance, while enhancing the reporting company’s reputation in the investment community.

Other key findings from the survey are that:

• Two-thirds of the respondents (66%) believed that reporting KPIs has helped the board to become clearer, as a company, about which KPIs are right for their business
• Almost half of the respondents (48%) stated that increased transparency has led to the better use of KPIs by the Board
• Two-thirds of the respondents (66%) felt that there was greater alignment among the board – on what the principal risks are
• Over half of the respondents (56%) stated that there was an improvement in the development and execution of active risk-management strategies
• Nearly three-quarters of the respondents (74%) felt that there was closer alignment between management reporting and external reporting