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One aim of this paper is to present and discuss strategies for expanding the traditional accounting reports with additional information on the investments in, and measures of, intangible assets. Three different strategies are discussed: differentiation, extension and supplementing. Furthermore, the results of an exploratory investigation are presented on the information needs of stock market analysts and investors. Here, the “missing factors” of the present model for financial reporting are discussed both in terms of content (i.e., what should be reported) and form (i.e., how it should be reported). The results of the investigation indicate the following consequences for financial reports: (a) income statements should clearly differentiate between operational expenses and expenses of an investment‐like character; (b) the respondents expressed no interest in an extended framework wherein investments in immaterial assets consistently are treated in the same way as material assets; and (c) key value drivers and resources should be identified and reported in a consistent manner, but they also have to be put in a meaningful context. Finally, a model is presented that can be used to report different items and levels of information derived from empirical studies of analysts' working process. The model is based on a top‐down approach with three layers: strategic, process and performance and resource.
The paper investigates pressures for change in accounting that have been suggested by researchers and practitioners as a consequence of the emergence of the information…
The paper investigates pressures for change in accounting that have been suggested by researchers and practitioners as a consequence of the emergence of the information age. Specifically, issues concerning the need for change in the traditional form and content of financial reporting to investors are addressed. One aim of the paper is to explore the nature of current problems and to speculate on future development of financial reporting. Several shortcomings in the content of financial reporting stem from a discrepancy between the value‐creating processes of modern corporations and the foundations underpinning the traditional accounting model. Today, different forms of intellectual capital are the prime resources that companies invest in to thrive in the future. However, the present accounting model has yet to accommodate Intellectual Capital. A second aim of this paper is to present strategies for expanding the traditional accounting reports with additional information on the investments in, and measures of, Intellectual Capital in a way that is both coherent and meets criteria concerning, e.g., completeness, verifiability and relevance. Three different strategies are discussed: inclusion, extension and supplementing.
Today, many IC approaches and company cases of IC reporting exist, but a common framework is lacking. This article explains policy and business perspectives for IC reporting and analyses the current IC approaches for defining essential drivers and policy strategies for such a framework. Focusing on external reporting and ‘value in use/stakeholder’ criteria is seen as a set of drivers that can combine policy and company perspectives and at the same time ensure involvement of a larger part of the business community and a framework recognisable to users of IC reports.