Research title:
DIRECTOR’S REPORT
Drawing up principles: from legal framework to companies practices
Carlo Bagnoli
Research objective:
In order to establish profitable relationships with stakeholders, the balance sheet and the director’s report should represent in a meaningful way the financial situation of the company, the causes that have led to this situation and its probable evolution.
Nevertheless, these objectives are rarely attained even if the principle of “full financial disclosure” has been accepted by companies. This is due to the limits of accounting synthesis that do not permit to satisfy through the balance sheet many of the stakeholders informative needs. However, this is overall due to the solutions in drawing up the director’s report adopted by companies that do not permit to overcome the limits above mentioned.
The main objective of this research is to analyse the contents and the ways of drawing up the director’s report decreed by the Italian lawmaker and those adopted by Italian companies in order to verify their coherence and to see if they are enable to satisfy the stakeholders informative needs.
Research steps:
- Analysis of the contents and of the ways of drawing up the director’s report decreed by the Italian lawmaker.
The aim of this step is to analyse the contents and the ways of drawing up the director’s report decreedby the Italian lawmaker at the article 2428 of Civil Code. To attain this aim, the frameworks provided by article 12 of the Italian Law n° 216/74 and by the article 46 of the Fourth EU directive - that can be considered starting-points for the one provided by the article 2428 above mentioned - will be also examine. For a better understanding of the contents and the ways of drawing up the director’s report decreedby the Italian lawmaker, they will be even compared to those decreed by other European lawmakers. In details, Spanish, German, French and British implementations of the article 46 of the Fourth EU directive are compared to the Italian one.
- Analysis of the contents and of the ways of drawing up the director’s report adopted by the Italian companies.
The aim of this step is to analyse the contents and the ways of drawing up the director’s report adopted by the Italian companies or, more precisely, by the Italian manufactory companies quoted on the Milan Stock Exchange. To attain this aim, every director’s report taken into account will be synthesised maintaining the original title of its paragraphs, but standardising its contents in order to permit their comparison with those contained in the other director’s reports analysed. In this synthesis the number of the letters used to describe every content is also counted and stored as well as the indicators used to qualify it. Then, a statistical analysis of all the collected synthesis will be made in order to underline the following points:
-the contents which are most frequently taken into account in the director’s reports and, among these, the ones which have more relevance;
-the indicators which are more frequently used to qualify the contents;
-the way in which the contents are grouped in order to understand the different ways of drawing up the director’s report adopted by the companies analysed.
This statistical analysis should especially find out if there are companies which adopt similar ways of drawing up the director’s report and, in that case, the causes that have led to these similar behaviours (e.g.: sectors, dimensions, etc.)
- Compared analysis of the contents and of the ways of drawing up the director’s report decreed by the Italian lawmaker and those adopted by the Italian companies.
The first aim of this step is to compare the contents and the ways of drawing up the director’s report decreedby the Italian lawmaker and those adopted by the Italian companies to verify their coherence or, more precisely, the lawfulness of the latter. The second aim of this step is to analyse the gap between the contents and the ways of drawing up the director’s report adopted by the Italian companies and those desiredby the various categories of stakeholders considered separately and as a whole. To recognise the stakeholders informative needs, financial analysts, trade-unionists, representatives of enterprises and consumers associations, etc., will be interviewed.