What investors actually want from your annual report

Most organisations spend months and 6-figures producing their annual report. Wrangling multiple contributors and approvals and that sprint to board sign-off. It's a significant investment of time and budget. But how do you know the report is effective?

It's not just whether it's compliant – most reports clear that bar. But does it genuinely communicate with the people it's supposed to reach? Recent Australian and global research suggests there's a persistent gap between what organisations deliver in their annual reports and what investors actually want to read.

 

Your shareholder base has changed. Has your report?

The ASX Australian Investor Study 2023 found that 10.2 million Australians now hold investments beyond their home and superannuation – the highest proportion of on-exchange investors in over a decade.¹

The investor profile has shifted significantly: women now make up 42% of all investors, and the 18–24 age group accounts for more than one in five new investors entering the market in the past two years.

This matters for annual report communication because a report written primarily for institutional analysts and fund managers may be missing the majority of its actual audience. The ASX study found that female investors are less likely than male investors to turn to company annual reports as an information source. Younger investors prefer digital-first formats and are more likely to consult social media, family and friends than formal corporate publications.

The question this raises isn't whether annual reports should exist – they absolutely should. It's whether the way most organisations write and structure them reflects who is actually reading.

Readability directly affects investor confidence

Academic research has consistently demonstrated that the readability of financial disclosures directly affects how investors perceive a company. Li's foundational 2008 study found that annual report readability is associated with earnings persistence – in practical terms, reports that are easier to read tend to belong to companies with more consistent financial performance.² Rennekamp's 2012 research went further, showing that readability affects how investors react to disclosures: easier-to-read reports amplify both positive and negative reactions, because investors engage more deeply with content they can actually process.³

The implication is clear. If your annual report is dense, jargon-heavy, and requires specialist knowledge to decode, you're not just making it harder to read. You're actively undermining investor confidence.

The Australian Shareholders' Association's Investor Sentiment Survey reinforces this at a practical level: retail shareholders consistently want equitable access to information and transparent communication.⁴ They want to understand how a company is performing, where it's heading, and how their investment is being managed – without needing a finance degree to get there.

This doesn't mean dumbing things down. It means writing with precision: shorter sentences, active voice, defined acronyms, specific numbers instead of vague qualifiers.

Structure for different reading depths

SEC investor testing and the Georgeson Global Institutional Investor Survey, has consistently found that investors prefer layered disclosure: key information prominent and concise, with detail available for those who want it.^5,6

Applied to annual reports, this means more than a table of contents. It means highlights sections that genuinely highlight – not just restate financial line items, but tell the reader what mattered this year and why. It means executive summaries that stand alone. Section openings that provide context before diving into detail. Navigation aids that let different audiences find what they need without reading cover to cover.

Most annual reports are structured around compliance categories rather than communication logic. The operating and financial review sits in one section, governance in another, sustainability somewhere else, and there's no visible thread connecting them. An investor trying to understand how strategy, risk and performance connect has to piece it together themselves.

The best annual reports make that connection visible. They layer information so that a five-minute scan gives you the key story, a twenty-minute read gives you the context, and the full document gives you the detail. That's not a design luxury – it's effective communication.

ESG communication is now a credibility test

The McKinsey ESG investor survey and the EY Global Institutional Investor Survey both point to the same trend: investors are increasingly sceptical of vague ESG claims.^7,8 Greenwashing concerns are rising, and the gap between aspiration and evidence is where credibility breaks down.

With mandatory Australian Sustainability Reporting Standards now in effect for the largest listed entities – Group 1 companies began reporting under AASB S2 from January 2025 – the bar for ESG communication is rising across the market.⁹ Even organisations not yet covered by the mandatory requirements are feeling the effects through supply chain and investor pressure.

The annual report is where this credibility test plays out most visibly. It's the public document that sits alongside the financial statements and receives board-level sign-off. If sustainability content is thin, siloed from the strategic narrative, or relies on aspiration over evidence, investors notice.

What this means for your next reporting cycle

This research isn't theoretical. It translates into practical choices for your report.