This is a report on the second annual "Annual Annual-Report Report," by Hill & Knowlton in Los Angeles--a survey of 222 individual investors in seven cities by the public relations firm. The report found, among other things, that investors wish that companies would make their annual reports more helpful to individuals trying to do their own stock analyses.
"The annual report is a golden opportunity for companies to reach individual investors but many managements are blowing it," said Tom Eidson, executive vice president of Hill & Knowlton.
Compared to a national sample of investors drawn by Hill & Knowlton, Los Angeles investors showed a somewhat greater inclination toward doing their own analyses--86% of those interviewed saying they look over stocks on their own or along with a broker's recommendations. That compares to 83% nationally. However, only 19% of the Angelenos claimed to base their investment decision "exclusively" on their own studies, compared to 43% nationally.
In any case, the survey found that 73% of investors in Los Angeles--compared to 69% nationally--would like to be able to rely more than they do on annual reports, and 57% of the Angelenos (and 67% of the national sample) rated annual reports as only fair to poor sources of useful investment data. It said that nationally 52% agreed with the statement: "I often distrust what management tells me in the annual report," and 82% felt that annuals "often" play down bad news or seek to obscure it.
"I wish annuals gave clear information in a straightforward manner. They should rely more on graphs and visuals to communicate," a Los Angeles investor commented in the survey.
The survey polled investors in Los Angeles, Minneapolis, Chicago, Houston, Tampa, Atlanta and New York.