Financial Reporting

INTRODUCTION

Roberts et al., (2005) noted that the appearance of annual reports since the 20th century has radically changed as a consequence of alterations of the internal as well as external environment. In the light of this, this report will first investigate Adidas AG annual report 2013 in respect to mandatory and voluntary disclosures (Section 1) as well as signs of impression management (Section 2). Subsequently it will try to classify the accounting system used by the company (Section 3).

ADIDAS GROUP

Adidas AG is the largest German manufacturing corporation specialized in the production of sport clothing and accessories (Adidas, 2013). Adidas AG is the holding company of the Adidas group which consists of Reebok, Rockport, TaylorMade-Adidas and 9.1% of FC Bayer Munich (Adidas, 2013). As a German Company, Adidas AG’ accounting procedures have been historically based on the national accounting system.

SECTION 1: a) MANDATORY AND VOLUNTARY DISCLOSURES AND THEIR RELATIVE IMPORTANCE TO IMPRESSION MANAGEMENT. b) EVIDENCES ON ADIDAS AG ANNUAL REPORT.

The interests of scholars in explaining and quantifying disclosures in annual reports began in the 1960s, with the use of theories such as stakeholder theory, agency theory, political and economic theory (Papova et al., 2013). Owusu-Ansha (1998) defined disclosures as tools for communication of financial information regarding a company’s financial position as well as performance to investors. Disclosures in annual reporting may be either mandatory or voluntary.

Mandatory disclosures have been defined as a company’s obligation to disclose financial information in annual reports, which are required by regulatory agencies such as local GAAP and IASB (Wallace et al., 1995). Taplin et al., (2002) suggested that mandatory disclosures are fundamental in order to preserve investors’ interests, to reduce earning manipulation as well as reducing the impact of impression management. Beyer et al., (2010) suggested...