England required companies to open their books to shareholders in 1844, after a wave of corporate fraud.
The Joint Stock Companies Act of 1844 in England introduced the requirement that companies registered under the act produce an annual balance sheet available to shareholders.1 The legislation was a response to a series of corporate frauds and collapses in the 1830s and 1840s, in which investors lost money in ventures whose financial condition was unknown or deliberately misrepresented. The act established the principle that limited liability required public accountability.
In the United States, mandatory annual reporting came later. The Securities Exchange Act of 1934, enacted in the wake of the 1929 stock market crash, created the Securities and Exchange Commission and required publicly traded companies to file annual reports with standardized financial disclosures.2 The SEC's Form 10-K became the standard vehicle for this disclosure.
For most of the twentieth century, the annual report served as the primary document through which companies communicated with shareholders. The format evolved from a simple balance sheet into a polished publication combining financial statements, executive letters, strategic narratives, and photographs. By the 1960s and 1970s, large corporations treated the annual report as a marketing document, commissioning graphic designers and professional photographers.3
The rise of digital communication, quarterly earnings calls, and real-time investor relations websites diminished the annual report's role as a primary information source. The accounting profession's development of standardized reporting frameworks, including Generally Accepted Accounting Principles (GAAP) in the United States and International Financial Reporting Standards (IFRS) globally, expanded the technical complexity of the disclosures these reports contain.