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News from Members More Integrated Reporting Can Enhance Investment Professionals’ Analysis

More Integrated Reporting Can Enhance Investment Professionals’ Analysis

by PwC September 24, 2014

80% of investment professionals agree that the quality of a company’s reporting impacts their perception of management quality. Nearly two-thirds of investment professionals (63%) say that the quality of a company’s reporting could have a direct financial impact on its cost of capital.

These are just some of the insights revealed in a global survey of 85 investment professionals on what constitutes useful corporate reporting and where they see opportunities for management teams to improve on today’s reporting.

Other insights investment professionals reveal in this survey include:
• 82% of respondents say when companies report information clearly and concisely, they feel more confident in their analysis.
• Explaining the business model is an important part of high-quality reporting. 70% of investment professionals primarily want business model explanations to focus on how a company generates cash and generates value that will become cash in the future.
• 80% of investment professionals told us that in order to be meaningful, an explanation of a company’s business model needs to link to its overall strategy.
• Only 14% of investment professionals think that companies generally disclose enough information on future strategic plans for them to feel comfortable with the judgements they need to make.
• There are a number of ‘effectiveness gaps’ in the reporting of key risks to the business model. Investment professionals want to know how these risks are managed or mitigated. However, although understanding management’s view of potential risks and their mitigation strategies is important, too much boilerplate disclosure is impeding that understanding.
• Investment professionals like to see linkage between different elements of company reporting. 87% say that clear links between a company’s strategic goals, risks, KPIs and financial statements is helpful for their analysis.
“The annual report remains a valuable source document, not only for financial information but also in relation to governance matters and environmental, social and human capital topics. It is also important for explaining strategy, risks and opportunities. The reliability and comprehensiveness of the annual report are its key strengths. 91% of investment professionals said they typically review the annual reports of companies they follow”, stated Mircea Bozga, Partner, Assurance Services, PwC Romania.

Notes to editors:

To view the report, click here or visit pwc.com/corporatereporting

About integrated reporting – Integrated reporting is a process that results in a communication, most visibly a periodic ‘integrated report’, about value creation over time. It is underpinned by integrated thinking and the fundamental concept of examining an organisation's strategy and performance in terms of financial and broader outcomes. An integrated report is a concise communication about how an organization’s strategy, governance, performance and prospects lead to the creation of value over the short, medium and long term.

About PwC

PwC helps organisations and individuals create the value they’re looking for. We’re a network of firms in 158 countries with more than 169,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com/ro

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.

© 2014 PwC. All rights reserved.

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