The Change of Disclosures over Time - a Case Study of the Volvo Group
Background and problem: Historically, the amount of information in the financial reports has increased substantially, which is partly due to changes in regulations. It is of interest for the company to produce financial information for several reasons. The financial reports are, however, costly to produce, which has to be weighed against the usefulness that the users might have of the information. With the substantial increase in amount of information in mind, one can ask when the costs of regulation are higher than the benefits. To be able to answer such a question, one must first study the change of information over time to see what changes there have been. Purpose: The purpose of this thesis is to determinate how the amount of disclosures in the annual reports has changed over time, which areas that have increased the most and if these differences are the result of changes in regulation. Method: This thesis is a case study of the Volvo Group. We have counted the words in the notes to the consolidated financial statements in the annual reports for the selected years. The first of the evaluated years is 1980 and then every fifth year up until 2005 with an addition of year 2002 and 2007. The information was first sorted according to the headline of the notes. To be able to analyse where the main changes have been, the notes were then put together into larger groups. Analysis and conclusions: The empirical results in this study show an enormous increase in amount of words during the last few decades. The increase was as large as 482 %. During the evaluated years, the amount of words had increased significantly in two specific periods. The groups that increased the most were Financial instruments and Accounting principles. In the deeper analysis, the changes in Personnel and Accounting principles could, in some degree, be a result of changes in the laws and regulations. It was, however, obvious that other factors affect the amount of words in the explanatory notes. Suggestion for further studies: The most interesting area to study further is to analyse when the costs of regulation are higher than the benefits. It could also be interesting to study other factors than regulation that affect the companies in their decisions regarding information in the explanatory notes.