Three quarters of FTSE 350 companies have demonstrated poor reporting, leaving shareholders at a loss as to how to make the direct link between company outcomes and the way in which management is rewarded, even though 78% linked performance indicators to remuneration.
The critical analysis comes from PwC, who published the findings after probing the accounts of the FTSE 350 for the 2011/2012 reporting cycle.
In addition, the firm's findings - in advance of its Building Public Trust Awards which recognises quality corporate reporting - show that most governance reports continue to be about process; just over a third (34%) clearly explain what the board and its committees have been focused on during the year - a bugbear for investors - while only 28% use their strategy as a base for their reporting.
The results also highlight 'a worrying gap between the most effective communicators and those whose reporting has not kept pace with new requirements, emerging practice and stakeholder demands,' PwC said.
When it came to boards and committees, only 34% clearly explained what boards and their committees have focused on during the year - a point flagged up by investors as a major sticking point as they were unsure what function audit committees perform.
Charles Bowman, senior corporate reporting partner, PwC said that for many companies, there may not seem to be any quick fixes to shortcomings in their reporting.
'We know many have found articulating their business model difficult. However, a start up company lives or dies by how well they can articulate their business model and what they stand for - it seems that some larger companies have lost sight of this. The best reporters aren't doing this out of a sense of altruism. They do it to communicate effectively with stakeholders and retain their trust,' said Bowman.
According to the firm, the overall picture indicated a slight improvement year-on-year in the effectiveness of reporting, with the most excellent reporting not necessarily emerging from the largest companies, as the FTSE 250 demonstrated the strongest innovation.