Exhibit 13.3 illustrates the variations seen in practice, from the perspective of a
U.S.-based financial statement user. Three sources were used to gather the financial
documents tabulated in the exhibit: the Global Access Database (Primark, Inc.), the
U.S. SEC’s Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system,
and company Web sites. The exhibit shows that SEC filers publish far more English
language information (in terms of pages of information), and more documents (due
to the SEC filing requirements for U.S. and non-U.S. registrants).
Evidence in the exhibit reflects a fact well-known in practice: U.S. SEC minimum
reporting requirements are set at a high level relative to those in non-U.S. jurisdic-
tions. SEC registrants file more reports, and more detailed reports than non-SEC reg-
istrants. Managers’ incentives (in terms of whether to file the reports, and to a large
extent, the content of the reports) are clear: If the required reports are not filed, the
company may have serious legal and disciplinary difficulties with the SEC and U.S.
stock exchanges on which the companies are listed. For this reason, the automobile
companies that are notSEC registrants disclose less.
The exhibit also gives evidence about voluntary disclosure practices. In particular,
in the absence of SEC requirements (for quarterly reports and detailed announce-
ments of annual general meetings), great variation is observed. For example, Volks-
wagen is a “world-class” company (2001 sales revenue of US$89 billion, with
322,060 employees), but has chosen not to list on a U.S. stock exchange, and there-
fore has avoided SEC registration. This decision is reflected in Volkswagen’s periodic
reports. The company does not voluntarily disclose information in its annual report
that is required in the Form 20-F (or 10-K) required of Fiat, Toyota, and Ford.^22
(b) Annual Reports. Exhibit 13.3 shows that Fiat, Ford, and Toyota (all SEC filers)
publish both “regular” annual reports and annual reports on U.S. SEC Forms 20-F
(Fiat and Toyota) or Form 10-K (Ford). Fiat’s annual report (“Consolidated and
Statutory Financial Statements”) is the most lengthy of the nine annual reports in our
data set, reflecting Italy’s highly detailed statutory annual reporting requirements.^23
Hyundai’s and Jiangling’s annual reports are the briefest, at 81 and 54 pages, respec-
tively, compared to an average of 156 pages for the other seven annual reports.
(c) Interim Reports. The United States and South Korea are the only two countries
represented in our sample that require the filing of quarterly reports by domestic firms
listed on primary markets.^24 Germany’s Neuer Markt, a specialized market for young,
high growth companies, required the filing of quarterly reports, and Japan’s high growth
equity market, Mothers, requires that listed companies publish quarterly results.^25 The
U.S. SEC’s interim reporting requirements are by far the most stringent. Non-U.S. se-
curities regulators are increasingly implementing a quarterly reporting requirement for
13 • 10 CORPORATE FINANCIAL DISCLOSURE: A GLOBAL ASSESSMENT(^22) Page length of annual reports is a crude proxy, but reflects the underlying disclosures. As shown in
Exhibit 13.3, page lengths of Forms 20-F filed by Fiat and Toyota (279 and 185, respectively) exceed the
page length of Volkswagen’s annual report (144).
(^23) Our sample reports do not include non-English language reports filed in non-U.S. home countries
and not translated into English and distributed in the United States. These include, for example, the
highly detailed Japanese Language Securities Report filed by Toyota with the Ministry of Finance in
Japan.
(^24) Consistent with the SEC’s acceptance of home country practice, the NYSE and NASDAQ do not
require non-U.S. listed companies to file quarterly financial reports.
(^25) The Neuer Markt, plagued by problems related to fraud and financial distress of its listed compa-
nies, ceased to exist at the end of 2002.