Working Paper Series
The Impact of Macroeconomic Variables on Corporate Performance - What Shareholders Ought to Know?
Abstract: Increased integration and growing macroeconomic
fluctuations require more attention to be paid to the link between the
”noise” that these fluctuations represent and the company’s own
development. For many reasons management must weed out the effects of the
”noise” so as to obtain a clear picture of the long-term sustainable
profits, and thus a picture of how the company’s intrinsic competitiveness
is fostered. An understanding of the effects of the fluctuations also
provides the basis for risk assessment. How far, then, should this “new”
view of corporate performance be extended to outsider shareholders? Current
reporting practice does not provide these shareholders with an adequate
idea of the character and magnitude of the macroeconomic impact on the
company. IAS 1 (rev. 1997) indicates that an improvement in this important
area may be in the offing. This paper discusses four different
interpretational levels of this standard and what these levels mean in
terms of relevant information transmitted to outsider shareholders.
Keywords: External Reporting; Corporate Performance; Macroeconomic Fluctuations; MUST-analysis ; (follow links to similar papers)
JEL-Codes: D81; M20; M21; M41; (follow links to similar papers)
30 pages, January 23, 2002, Revised August 22, 2007
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- This paper is published as:
Oxelheim, Lars, (2003), 'The Impact of Macroeconomic Variables on Corporate Performance - What Shareholders Ought to Know? Published with the title Macroeconomic Variables and Corporate Performance', Financial Analysts Journal, Vol. 59, July/August, No. 4, pages 36-50
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