The Annual Report
Each year every stockholder receives an annual report about the company in which he or she has an investment. These annual reports have changed much over the last 20 or 30 years. Previously, the typical report would consist of a general discussion of the health of the company, without any comparisons to previous years. Now virtually all major corporations give very detailed reports. They provide easy-to-read charts and summaries, usually covering a 10-year period.A certified public accounting firm, after performing an audit, certifies that the figures and statements about the finances reflect generally accepted accounting principles. In addition to this information, company executives are required to disclose the extent of their holdings in the company. The entire process is supervised in great detail by the Securities and Exchange Commission (SEC), often described as a "watchdog" agency of the federal government.
