The ValueReporting Revolution: Moving Beyond the Earnings GameRobert G. Eccles, Robert H. Herz, E. Mary Keegan, David M. H. Phillips ISBN: 978-0-471-39879-0Hardcover 368 pages, February 2001US $47.95

To help companies identify and communicate information about the key business activities and assets

that drive shareholder value.

Value Reporting Revolution

• A call to manager to adopt a philosophy of complete transparency – to report information to the market on all the measures they use internally to manage.

• That encompasses performance dimensions that other stakeholders regard as important as well, including social and environmental responsibility.

Historical Financial Statements

Lagging indicators… One size fits all (GAAP) Ignores non-financial measures Reports results of past decisions Periodic Historical Cost-basis Financial only Statements Backward-looking

Leading indicators… Tied to mission, vision and values Tied to factors critical to success Moves decision criteria to forefront On-demand Real-time/future Value-basis Comprehensive Custom reports Forward-looking

Past FuturePresent

Enhanced Business Reporting

The Need for Enhanced Business Reporting

Companies create sustainable economic value by developing, operationalizing and executing superior strategies which guide the company towards delivering valuable products and services.

These strategies yield future cash flows greater than investment or economic profit.

Companies ensure that investors realize the value created by the business units and the corporate center by managing and delivering upon market expectations.

Companies preserve the value of the underlying business unit cash flows through effective management controls, risk and tax management.

Value

Creation

Value

Preservation

Value

RealizationInvestmentCommunityCompanies

A Better Managed Company

What is Enhanced Business Reporting?

Providing shareholders and other stakeholders the information they need to make decisions– Financial and non-financial value drivers– Tangible and intangible assets– Integrated management and reporting of risk and

value

Voluntary transparency beyond regulatory reporting requirements

A way to move beyond The Earnings Game

What is Enhanced Business Reporting?

A Three-tier Reporting Model

Tier ThreeCompany-Specific

Information

Tier TwoIndustry-

Based Standards

Tier OneGlobal Generally Accepted

Accounting Principles

Source: Building Public Trust by Samuel DiPiazza and Robert Eccles