Program Overview

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Beyond Financial Statements: Narrative Reporting on Value Creation

Course Description

The main areas covered in the course are as follows:

1. The role of narrative reporting: narrative reporting has become popular in recent years due to its ability to convey information about an entity’s business model, performance, principal risks, and its social and environmental impact. Thus, it provides context to financial numbers and helps stakeholders evaluate a business.
2. Narrative reporting regulations: regulators have enforced regulations that require certain entities to communicate narrative information. The Companies Act in the UK and the EU Directive 95/2014 were enforced as a result of regulators’ efforts to improve narrative reporting. More recently, new regulations, namely the Corporate Social Responsibility Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDD), have been enforced in EU countries with the aim to improve business practices to safeguard the environment and social impacts and foster transparency on those issues.
3. The use of content analysis research method to inquire narrative reports: content analysis can be used to investigate narrative reports issued by This tool allows a researcher to look for information about some items in a text. Its application to narrative reports can be used to identify and classify information about different items. This can be further enhanced using Natural Language Processing (NLP) and Large Language Models (LLM) to scrape large amounts of text across firms.
4. Key areas of narrative reporting: the most important areas of narrative reporting are discussed. These areas include business model reporting, which help companies representing their value creation process, key performance indicators (KPIs), intellectual capital, risks, environmental, social, and governance (ESG) factors.
5. Communication strategies in non-financial reporting: The discretion that managers have in selecting the items that will be disclosed and on how to represent them could lead to withholding or manipulating information, misleading Such instances are sometimes scandalized as, for example, greenwashing, which concerns ESG disclosures.

Description of Qualifications

Narrative reporting is receiving great attention due to its ability to provide information about a firm’s sustainability and value creation and to the enforcement of recent regulatory frameworks. Offering basic-to-intermediate understanding of narrative reporting, the course integrates traditional financial accounting courses, which focus on financial accounting standards and financial statement analysis, and courses about corporate communications, strategy, and sustainable development by illustrating how those issues can be represented in companies’ reports. Learning objectives for students are as follows:

• Knowledge:
  • how narrative reporting contributes to the satisfaction of different stakeholder informative needs
  • key frameworks shaping current narrative reporting practices
  • the role of the business model concept in contextualizing non-financial disclosure
  • the main categories of non-financial performance measures supporting narrative disclosure
  • the main challenges related to narrative reporting for managers, users, and standard setters.
• Skills:
  • critically analyze the content of narrative reports by applying textual analysis
  • autonomously develop a complete coding framework to analyze the contents of the narrative section of the annual report
  • understand how the reliability of the content analysis methodology can be assessed
  • coherently apply the content analysis method to an annual report
  • understand how the principles of content analysis could be extended to automated textual analysis.
• Competences:
  • critically assess non-financial reporting strategy, by reading, analyzing and reflecting upon the content of narrative reports
  • identify the most relevant items in the reports
  • evaluate the coherence of the different items disclosed through narrative reporting and the adherence of narrative disclosures to existing frameworks

Course Details

• ECTS: 5
• Form of instruction: Classroom instruction
• Form of examination: Take-home assignment (Assign)
• Language of instruction: English
• Level: Master
• Location: Aarhus

Teaching

• Form of instruction: Classroom instruction
• Instructors: Lorenzo Simoni, Sam Rawsthorne
• Course coordinator: Mai Skjøtt Linneberg

Comments on the Form of Instruction

The lectures are designed to offer:

1. A presentation of the main topics to the students.
2. Discussion of relevant literature: the students will discuss the relevant literature in small groups. The papers will then be discussed in the classroom and the most important points explained by the instructor.
3. Case-based teaching: real-world cases will be discussed, and students will be required to apply content analysis to analyze the reports of selected companies, identifying crucial issues related to narrative reporting.

Literature

Academic papers, guidelines issued by standard setters, and documents and frameworks developed by professional bodies will be used as course material. Some examples of relevant academic papers are the following:

• Beattie, V., & Smith, S. J. (2013). Value creation and business models: Refocusing the intellectual capital debate. The British Accounting Review, (4), 243-254.
• Bini, L., Schaper, S., Simoni, L., Giunta, F., & Nielsen, C. (2023). Mandatory non-financial disclosure: is everybody on the same page about business model reporting?. Accounting Forum, (2), 198-222.
• Cho, C.H., Michelon, G., & Patten, D. M. (2012). Impression management in sustainability reports: An empirical investigation of the use of graphs. Accounting and the Public Interest, (1), 16-37.
• Fiechter, P., Hitz, J. M., & Lehmann, N. (2022). Real effects of a widespread CSR reporting mandate: Evidence from the European Union's CSR Directive. Journal of Accounting Research, (4).
• Kim, J. B., Wang, C., & Wu, F. (2023). The real effects of risk disclosures: evidence from climate change reporting in 10-Ks. Review of Accounting Studies, (4).

Examination

• Form of examination: Take-home assignment (Assign)
• Form of co-examination: No co-examination
• Assessment: 7-point grading scale
• Permitted exam aids: All

Requirements for Taking the Exam

In order to participate in the exam, there is an 80% attendance requirement.

Comments

Take-home assignment submitted in WISEflow. The exam consists of a portfolio of written assignments, which students work on during the course. The assignments are individual and students receive collective feedback before submitting a finalized version for grading. The finalized version should contain all assignments in one PDF-file and be submitted through WISEflow at the end of the course. The portfolio consists of the following 3 assignments:

• Assignment 1: Identification of a case company and description of its main activities, analysis of the competitive environment, key stakeholders, and risks the company is exposed to. The assignment is individual, Each student will have to analyze a different case company. It is not possible for two students in the class to analyze the same company. The company must be a large non-financial company (preferably listed) domiciled in a EU country or in the UK, and there must be narrative reports available for that company for at least two consecutive years after 2021. The choice of the company must be validated by the instructor.
• Assignment 2: Analysis of the narrative part of the case company’s annual report to identify the framework(s) used and the main elements related to the business model, risks, performance measures, and intellectual capital. Students will have to analyze how the items are presented and the linkages among those items. The examination of disclosure choices will require understanding the main theoretical frameworks that are used to explain companies’ disclosure practices. These topics will be discussed during the first and the second week of teaching.
• Assignment 3: Analysis of ESG information, with a focus on potential greenwashing, the internal cohesion of narrative information, signs of impression management, longitudinal analysis of non-financial disclosures, and comment on the overall reporting strategy. When commenting reporting strategies, students must refer to the main theories in the field. These topics will be discussed in the third week of teaching. The final portfolio should be no longer than 30,000 characters (incl. blanks).

Re-exam - Prerequisite for Re-examination Participation

Students who have fulfilled the “prerequisites for examination participation” stated above have the right to participate in the re-exam (2nd and 3rd attempts) without having to fulfill additional prerequisites. Students who have not fulfilled the “prerequisites for examination participation” stated above will have to fulfill the following prerequisite activity before being able to participate in the re-exam (either 2nd or 3rd attempt): Submit a critical reflection over the course’s curriculum. The report should be entitled “Theoretical reflections on [course title]” and amount to max. 22,000 characters. The critical reflection could for instance be based on a focused review of the literature on one (or more) topic(s) included in the curriculum. The report’s content should be meaningful for the prerequisite to be fulfilled, but will not be subject to a grade. The deadline for submitting the report is September 1st, 2025 (to be allowed to participate in the 2nd attempt) and January 5th, 2026 (to be allowed to participate in the 3rd attempt). Students who have fulfilled the prerequisite for re-examination participation for the 2nd attempt automatically fulfill the prerequisite for participating in the 3rd attempt. Students who have neither fulfilled the prerequisites for examination nor the prerequisite for re-examination before the 2nd attempt will be considered as having made use of their 2nd attempt and will have to wait to the 3rd attempt to take the re-exam (subject to fulfilling the prerequisite for re-examination participation in due time).

Re-exam

Re-exam: written take-home exam (max. 36,000 characters including spaces). The dates for the first retake are:

• 27th October .00 noon: You will receive your exam question via WISEflow.
• 3rd November noon: Deadline for submitting via WISEflow. The dates for the second retake are:
• January 30th .00 noon: You will receive your exam question via WISEflow.
• February 6th .00 noon: Deadline for submitting via WISEflow. The format for the second re-take is the same as for the re-take.

Academic Prerequisites

Students should have basic knowledge of financial accounting. They should also have some notions of strategy and value creation mechanisms. Knowledge of the concepts of intellectual capital, business models, and non-financial reporting would be a plus.

Language of Instruction

English

Hours - Week - Period

Teaching dates: 23 July – 8 August. The deadline for handing in the final portfolio is Friday, August 15th at 12:00 Noon. Lectures are expected to be held between 9 am and 1 pm.

Expected Student Workload

• Classroom attendance: 52 hours
• Preparation: 75 hours
• Feedback activity: 5 hours
• Papers (prerequisites): 15 hours
• Exam: 10 hours

Type of Course

Summer University

Primary Programme

Master's Degree Programme in Economics and Business Administration

Related Programmes

• Master's Degree Programme in Business Administration
• Master's Degree Programme in Business Administration and Commercial Law
• Master's Degree Programme in Business Economics and Auditing

Department

Department of Management

Faculty

Aarhus BSS

Location

Aarhus

Maximum Number of Participants

Maximum 40 participants. 10 seats are reserved for international exchange students from AU partner universities. If there are more eligible applicants than available seats, they will be distributed according to the overall selection criteria and then the following selection criteria:

• Randomized draw.