Investors are overwhelmed by the volume and complexity of disclosures that are issued by public companies, making it difficult to make good investment decisions, according to the latest research by KPMG and the Financial Executives Research Foundation.

The overall volume of disclosures in annual reports and other financial statements has grown by 16 percent in the past six years, while the volume of footnote disclosures has expanded 28 percent in the same time period, KPMG and FERF concluded. They based their conclusions on a survey of financial executives, a review of recent academic literature, and an analysis of annual reports filed by 25 leading public companies across a range of industries.

There's so much disclosure, the point of those disclosures is getting lost for investors, says Terry Iannaconi, audit partner for KPMG and the main author of the report. The problem is especially acute for smaller investors who are struggling to absorb the increased volume of information. “The sheer quantity of financial disclosure has become so excessive that it has diminished the overall value of these disclosures,” Iannaconi says.

The Financial Accounting Standards Board is studying financial statement disclosures to see if there is a way to make them more relevant, less redundant, and perhaps less voluminous in the process. The KPMG/FERF report recommends FASB pick up the pace on that particular effort, to develop a more holistic approach to disclosure requirements that would better balance disclosure considerations.

The report also recommends that the Securities and Exchange Commission take measures to address immaterial, redundant, or unnecessary disclosures, to enable better use of technology to flag repetitive information in multiple filings, and to think more about the cost-benefit equation when requiring new disclosures.

“I don't think the recommendations are a cure for the problem, but they certainly will be helpful in addressing some of the issues that need to be considered as it relates to disclosure overload,” says Iannaconi.