Expanding the Scope of Financial Reports

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.