What do Australian annual reports say about future earnings?
- Publication Type:
- Journal Article
- Australian Accounting Review, 2000, 10 (20), pp. 17 - 25
- Issue Date:
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Prospective earnings information in Australian firms’ annual reports has been claimed to be of sufficient importance to warrant its statutory requirement, or at least its “active encouragement”. With the introduction of AASB 1039 Concise Financial Reports, management discussion and analysis is required in some circumstances, although there is no explicit requirement to provide prospective earnings disclosures. A survey of a sample of ASX-listed firms shows that about 25% include some form of earnings forecast, although most are qualitative, while even a coarse measure of their accuracy suggests they are relatively unreliable. These results give rise to some concern that encouraging the provision of prospective earnings data may not necessarily assist investors. © 2000 CPA Australia.
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