Content and quality of information: analysis of the management financial discussion session in the Italian financial reports in the period 2003-2008

The socio-economic environment in which companies operate has changed considerably. Three events in particular have affected the management of listed companies: (i) the increasing importance of the intangible assets as basic elements of the competitive advantage in business; (ii) the accounting harmonisation and the evolution of the management discussion regulation both at European and national level in the period 2003- 2008; (iii) the world financial crisis. In this worldwide context, regulators view narrative disclosures as the key to achieving the desired step-change in the quality of corporate reporting. To satisfy the new stakeholder information needs, business reporting has to expand beyond the traditional financial reporting model towards more forward-looking information of a non-financial nature. The paper wants to study the quantity of financial communication in the management discussion for each information category selected and its quality in terms of: time orientation (historical information, forward-looking information, intertemporal information), nature (financial, non-financial) and mode of expression (narrative, quantitative, mixed). The analysis is performed considering the 2003, 2005 and 2008 financial reports in Italy. Content analysis is the method applied. One of the main results that emerges, is that the quantity of information increases and that this information is always mainly related to the business and it is non-financial, narrative and historical. Very little space is dedicated to forward-looking information.