Investors want companies to a better job communicating with them through corporate annual reports, according to a new study from PricewaterhouseCoopers (PwC).

PwC surveyed the reporting practices of the world’s largest companies — the Fortune Global 500 (G500) — and examined the information these companies communicate in narrative form to find if it’s meeting the needs of investors.

“The survey’s key findings are simple. Companies provide some narrative information in their reports, but the top G500 reporters provide a great deal more,” says Rick Snidal a partner at PwC. “Our research tells us that in addition to the financial details, the investor community wants the company to communicate its performance and prospects in straightforward language. Corporate reports are the primary medium for companies to communicate with investors and from the investor community’s perspective, there is plenty of room for improvement.”

The survey found that two-thirds of the G500 demonstrate consistency between their narrative and financial reporting on their business segments, while 60% offer performance highlights. On the other hand, only 15% report specific key performance indicators of the kind that management routinely uses to operate the business. And, just 10% of narrative reporting that includes quantitative information is forward-looking.

“Changes to corporate reporting will be a ‘win-win’ opportunity for companies and their investors,” says Snidal. “The ‘win’ for companies is that it enables them to tell their own story through management’s eyes and using management’s key performance indicators. The ‘win’ for investors is increased transparency, leading to better-informed investment decisions.”

Additional survey results include:

  • 56% of narrative reporting relates to explaining performance outcomes;
  • 10% of companies report on capital employed in the business;
  • 6% of companies report the cost of capital;
  • 30% of companies provide some form of revenue or operating profit ‘bridge’ reconciling year-on-year performance;
  • 67% of companies report segment information in financial statements on both a business unit and a geographic basis; and
  • 71% of companies report segment information solely on a business unit basis in their narrative reporting.