This paper investigates the motivation for the voluntary disclosure of financial information by
companies in their annual financial statements, by examining aspects of the usefulness of the
value added statement. The value added statement is published voluntarily with the annual
financial statements and is currently experiencing high levels of publication in South Africa, which
is evidently brought about by the high political costs and significant legitimacy threats that
companies operating in South Africa are facing.
It was found from the literature and from a survey among management that the value added
statement was primarily aimed at the employees. Employees have also been regarded as users
of financial information in the literature. However, a survey among trade unions in South Africa
found that almost no use is made of the value added statement even though the unions make use
of other financial information. This indicates that voluntary disclosures do not necessarily satisfy
the information needs of their intended audience. The research also indicates that the trade
unions might not use the value added statement because they suspect that the statement is
being used to reduce political costs and legitimacy threats, and is therefore not reliable. This is a
major shortcoming of voluntary disclosures.