An Analysis Of The Corporate Annual Report By Applying Functional Grammar

The corporate annual report is a legally required document submitted to the shareholders by the management. It discloses information on corporate performance during the previous year and forecasts the operations of the coming year. It must comply with the requirements of relevant authorities for financial reporting. Meanwhile, as a chief means of communicating with the shareholders, it is expected to project a favourable image of itself, as Communication Accommodation Theory (CAT) advises.Interest in the annual report has been on the rise. Western scholars, accounting researchers in particular, have been exploring this field for years. One of their conclusions is that the annual report is increasingly difficult to read. They suggest that difficulty levels somehow relate to corporate performance. They also point out the necessity of investigating the relationship between corporate size and sector and difficulty levels. These studies shed valuable insights into the annual report. But much remains to be done. What is lacking is vigorous linguistic research on this important corporate document.This dissertation is an attempt to take the annual report as discourse and apply Functional Grammar as the tool of analysis. I have chosen to highlight Chairman's Statement to Shareholders, which is one of the two major verbal blocks of the annual report. It sets out to explore the patterns of lexico-grammatical choices in Chairman's Statement to Shareholders and what the patterns reveal about the two major objectives. An added dimension of research is how the patterns differ between companies and sectors.The raw corpus are downloaded from the Web site: http://www.morthcote.co.uk/FTSE100.html. It provides the annual reports of the major British companies listed on the London Stock Exchange, which can be said to represent international practice. Of the 13 sectors available, I have chosen to focus on the energy sector (8 companies) and the publishing & media sector (8 companies) for detailed study. Following Functional Grammar, I analyse 16 samples of Chairman's Statement to Shareholders in terms of process types, Mood components and Thematic elements.The analysis concludes that there are general patterns of lexico-grammatical choices in them. There are far more Material and Relational processes, a relatively smaller number of Mental and Verbal processes and few Behavioural and Existential processes. Present tense is frequently used. Modal operators with the meaning of ability /willingness/determination are frequently used. No Modal operators with the meaning of obligation are used. Mood Adjuncts are constrained to those words expressing "usuality", "intensity", "degree", "obviousness", "typicality", etc. Thematic analysis shows that there is much more Experiential Theme than the other two types of Theme. Between the two types of Experiential Theme, Subject Theme quite outnumbers Adjunct Theme.This co-occurrence of lexico-grammatical elements construes the two objectives of the annual report. The similarities and differences across companies and sectors suggest that there are generic features in the annual report, which companies in practice make reference to and deviate from, consciously or unconsciously.This research offers practical tips to business writers and policy-makers in financial reporting. While general rules are certainly in need, considerable allowance should be made considering the reality of diverse practice.The dissertation concludes with a few questions for further research.