Annual reports were low on popularity and high on credibility, while the Internet was just the opposite. -- RONALD HINCKLEY

Rite of Spring - The Sleeper of the Year For Credibility? It's Not TV

Let's face it, reading annual reports isn't exactly high on people's list of fun ways to pass an evening. But a recent study concludes that investors trust the yearly summaries of corporate performance more than any other of 38 sources of information rated.

According to a National Credibility Index survey of 1,002 adults nationwide, annual reports got the highest average score for overall credibility of investment information, while Internet chat rooms received the lowest. Though print journalism generally rated well, television business news was ranked in the bottom third of reliable sources.

The survey was conducted by research firm Research/Strategy/Management with Columbia University for the Public Relations Society of America Foundation.

Ironically, though people trust the annual report most, only 8% of respondents said they'd go straight to it for information. The reports were "low on where [investors] go, and high on credibility, while the Internet was just the opposite, high on where they go, and low on credibility," says Ronald Hinckley, president of R/S/M.

More curious was how respondents ranked real people. The survey found the chief financial officer (rated highest among management sources) ranked below a business school professor. Union leaders placed just ahead of a blind prospectus received in the mail. A cold call from a broker fell near the bottom, but information from a known stockbroker outranked a story in a specialty investing magazine.

The findings about the annual reports confirmed some of those of Laura Rittenhouse, president of UtiliVentures, a strategic adviser that rates CEO letters in the annual report. "Warren Buffett has been saying if he finds the annual report and the letter don't appear to be candid, then [the company] doesn't warrant more research," Rittenhouse says. "A lot of very savvy investors look at it as a good starting place." And, she notes, CEOs are even taking the annual letter into uncharted waters. This year, Lucent's CEO actually referred readers to the footnotes of the financial statements.