Graphical presentation of quantitative data within corporate annual reports has
become one of the techniques used by management to disclose quantitative
information. The purposes of the paper are (a) to review the normative advan
tages and limitations of graphs in corporate reporting, and (b) to extend our
knowledge about the presentation of annual report chart graphics by examining
Asian (Hong Kong) data. Two surveys of chart graphics were undertaken: 140
annual reports for 1992-1993 and 114 for 1994-1995. It was found that 38% and
35% of companies respectively for each of the two time periods include chart
graphics. However, the second survey found the surprising and disturbing result
that the construction techniques used in approximately half of all graphs violate
sound principles and are therefore misleading. Because misleading graphs
occur across all industrial sectors, violations may be the result of preparer
ignorance and carelessness rather than wilful manipulation to deceive. Without
objective evidence about this, professional management and accountancy
organizations probably need not yet draft construction guidelines for annual
report preparers.
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