1.4 Elucidating Key Notions

1.4.1 Financial Disclosure

Financial disclosure is a crucial facet of corporate life.It can be defined as"any deliberate public release of financial information, whether voluntary or required, numbers or words, formal or informal, at any time during the year"（Gibbins et al.,1990:126）.Corporate financial disclosure can be divided into two categories-mandatory and voluntary.In the first case, financial information is disclosed to fulfill the legal obligations.In the US,the Securities and Exchange Commission（SEC）requires all companies that listed on American exchanges to periodically report their financial results through a series of standardized documents, such as quarterly and annual reports.Similarly, the publicly traded companies in China are also required by China Securities Regulatory Commission（CSRC）to disclose their financial data at regular intervals in the form of annual reports and other periodic reports.In the second case, companies may voluntarily release financial information through press releases, shareholder circulars, earnings announcements, etc.In recent years, companies are increasingly concerned with voluntary disclosure, seeking to engage their stakeholders more proactively and recuperate public confidence and trust in the financial community.In a survey of Fortune 500 companies carried out by Laskin（2009）,preparing documentation for financial disclosure was identified among the most frequent of business activities, spanning across several departments, including finance, communication and especially investor relations.

1.4.2 Corporate Annual Report

Companies listed on a stock exchange are legally required to report their financial performance at regular intervals.Corporate annual report is one of the most important ways for listed companies to disclose their financial information.It is a comprehensive report on a company's activities and financial performance throughout the preceding fiscal year.Traditionally, a CAR is a formal public document produced as a response to the mandatory requirements existing in major economies（Stanton Stanton,2002）.Now it has evolved from a dull financial document to a highly polished text characterized by narrative sections, colorful images and sophisticated graphics（Beattie et al.,2008;Crawford Camiciottoli,2010b）.A typical annual report usually includes such items as corporate profile, letter to shareholders, operating and financial review, management's discussion and analysis, financial statements, directors' report, stockholder and investor information, and some other information deemed relevant to stakeholders.The details provided in annual reports are helpful for investors to understand a company's past performance and financial position, specifically its successes and failures, current problems, and prospects for its future development.In most cases, annual reports of a listed company can be accessed and downloaded in PDF format from the company's official website.

1.4.3 Chairman's Letter

Most annual reports produced by large listed companies include a letter or a similar business document addressed to shareholders, the name of which sometimes varies（such as chairman's/CEO's/president's letter/ statement, letter to shareholders, letter from the chairman, etc.）.Given the similar communicative purposes of this type of discourse, it is named in a unified way in this book-chairman's letter（CL）.Chairman's letter usually occupies a prominent position in an annual report.Typically, the letter summarizes the company's performance of the past fiscal year and concludes with a brief discussion of its future outlook.The review component of the letter is largely constrained by the accounting data presented in the report, while the forecast part is not similarly constrained.In the forecast,"management is free to provide whatever assessments of prospective firm performance it deems important",which are not immediately verifiable（McConnell et al.,1986:66）.The prospective information is precisely the kind of information investors consider important for investment decision-making.As Courtis and Hassan（2002:394）observe, though chairman's letter is unlikely to influence investment decisions on its own,"it helps to confirm investor expectations and to prompt belief revisions about future outcomes".