THE VALUE ADDED STATEMENT: DOES IT ADD ANY VALUE?

The value added statement has been voluntarily reported by South African companies for many years despite reservations as to its usefulness. This article examines current literature on value added statements in two areas: the usefulness of the value added statement in South Africa and the relevance of social accounting theories in explaining its continued disclosure in South African listed companies' annual reports. It also reports the results of a questionnaire survey addressed to preparers of value added statements. The research studies examined in the literature review indicate that legitimacy theory is more likely to provide an explanation for the disclosure of value added statements in annual reports in South Africa. The results of the empirical survey indicates that the majority of the respondents are of the opinion that it is desirable to prepare a value added statement, but that it is not used in the majority of companies. Furthermore, reasons given by the preparers for the desirability of the value added statement provide some evidence that legitimacy theory may be behind the propensity of companies to publish a value added statement. The article recommends that the preparation of the value added statement is standardised; however, the disclosure of an independently prepared value added report may be more useful to all users.