Harmony between the information contained in the text and figures of Brazilian companies’ annual reports

Abstract

The purpose of this study is to analyze the harmony between information provided in the narrative sections of annual reports and the corporate financial performance. The sample consisted of 120 companies listed on BM&FBovespa (Brazilian Stock Exchange) in 2009 -- 60 with greater positive variation and 60 with greater negative variation in net accounting profit. Keywords relating to three central topics were selected: profitability, growth and management. Through content analysis, the meaning of these keywords in the reports was evaluated (quantitative positive, qualitative positive, quantitative negative and qualitative negative). Once the frequencies were obtained, two logistic regressions were performed to compare the text to the numbers, one on the raw frequency of words and another by a weighting of terms. The results indicate that, in the information linked to the topic of profitability, the text is harmonious with the numbers. In the information relating to growth, harmony is partial. In addition, when it comes to information linked to management, there is conflict between the narrative sections and corporate performance. Finally, it was found that, the more subjective the information, the greater the conflict.

Keywords

• Relatórios Anuais
• Dissonância cognitiva
• Análise de Conteúdo.