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Compliance
by leon on June 13, 2007

The study, from London's Cass Business School, found that conventional measures failed to track key areas like human capital, which means people and teams, structural capital, or the processes, information systems and patents that remain when employees leave, and relational capital or links with customers, suppliers and other stakeholders.
In an analysis of 2003 annual reports for 150 companies, coverage of intangibles was skewed towards relational capital and away from human capital. What this suggests is that companies want to assure the market of their prospects by focusing on relations with customers and suppliers. But as the report says, it also risks drawing attention away from longer-term drivers of innovation involving people working in teams and implies that much of what companies write about people in their annual reports has little bearing on future business performance.
The Cass study will provide ammunition for those who say annual reports are no longer that relevant and are just a waste of time and space.
I have looked at that issue here.
Permalink: Company reports distort value
Trackback: http://publish.creative-weblogging.com/publish/mt-tb.pl/74731
Mr Wong
Vote for Company reports distort value:
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Rating: 8.14 out of 7 vote(s) cast.
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Response from:
BizzBites.com
Company reports might be misleading investors by distorting their true market value because they rely on convenentional measures that fail to track what a company is really worth.
Response from:
Company reports might be misleading investors by distorting their true market value because they rely on convenentional measures that fail to track what a company is really worth.
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