The Impact of Macroeconomic Variables on Corporate Performance - What Shareholders Ought to Know?
AbstractIncreased integration and growing macroeconomic fluctuations require more attention to be paid to the link between the ”noise” that these fluctuations represent and the company’s own development. For many reasons management must weed out the effects of the ”noise” so as to obtain a clear picture of the long-term sustainable profits, and thus a picture of how the company’s intrinsic competitiveness is fostered. An understanding of the effects of the fluctuations also provides the basis for risk assessment. How far, then, should this “new” view of corporate performance be extended to outsider shareholders? Current reporting practice does not provide these shareholders with an adequate idea of the character and magnitude of the macroeconomic impact on the company. IAS 1 (rev. 1997) indicates that an improvement in this important area may be in the offing. This paper discusses four different interpretational levels of this standard and what these levels mean in terms of relevant information transmitted to outsider shareholders.
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Bibliographic InfoPaper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 571.
Length: 30 pages
Date of creation: 23 Jan 2002
Date of revision: 22 Aug 2007
Publication status: Published in Financial Analysts Journal, 2003, pages 36-50.
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External Reporting; Corporate Performance; Macroeconomic Fluctuations; MUST-analysis ;
Find related papers by JEL classification:
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- M20 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - General
- M21 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - Business Economics
- M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-02-10 (All new papers)
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