Understanding the needs and opinions of investment professionals is crucial if management teams are to prepare truly useful financial reports and accounts. PwC has conducted a series of surveys of investment professionals aimed at maximising the effectiveness of corporate reporting.
Investment professionals are relatively open-minded when it comes to the presentation of accounting policies and notes to the financial statements. However, companies need to ensure that, whatever format or approach they choose, they help the users of their accounts find information easily and provide clear links between related content.
We interviewed 85 investment professionals from around the world to hear their views on what they find useful, and where companies might improve. We asked for their thoughts on accounting policy notes, the format of financial statements and the linkage between financial results and management commentary.
We outline below what they told us:
Management teams that provide high-quality, integrated reports that tell a clear story not only help investment professionals but also enhance their own reputations and capital-raising potential. With the growing momentum towards more future-orientated integrated reporting, we asked investment professionals around the world for their views on what constitutes useful corporate reporting and where they see opportunities for management teams to improve on today’s reporting.
When investment professionals analyse a company, their goal is to understand the quality and sustainability of its ‘underlying’ or ‘core’ performance. They want insight into what drives profits year on year and the measures that management teams consider to be market moving. They want to understand the impact on company performance of management actions relative to general market conditions.
Adjusted performance measures (APMs) are widely reported by companies alongside GAAP-based results. Based on interviews with investment professionals around the world, it is clear that APMs are highly valued. Nevertheless, their value could be enhanced substantially by changes in how they are reported. Investment professionals tell us: