This study investigates the value-relevance of non-financial information published in the narrative part of SPI annual reports. Our research contributes to the issue by introducing a new and objective approach for measuring non-financial information: based on a combination of content and factorial analysis, we quantify the extent of profitability and sustainability related information and find evidence for a positive relation to share price. The measurement aims to take both quantity and variety of expressions into account and proves that this is of investors' interest. Furthermore, consistent with prior studies based on Ohlson´s (1995) value-relevance model, we consider financial statement data and find that net income and book value of equity are positively related to market value. Our findings implicate that both, numerical and non-numerical information influence investors' perceptions and are therefore, crucial to be included in annual reports as the major communication tool.

Thomas Berndt, Céline Bilolo, Ludwig Müller

7 Jun 2014