Sustainable Growth:

Performance Measurement

Corporate Reporting: Three-Tier Model

Achieving Enhanced Shareholder Value through Leading-Edge ValueReporting

Executive summary. Source: Leading-Edge Reporting, PricewaterhouseCoopers

ValueReporting - Three-Tier Reporting Model - Showing Investors Quality and Sustainability of Performance

Three Tiers of Information

  1. Generally Accepted Accounting Principles (GAAP) give investors the ability to compare companies with their international counterparts.

  2. Industry-Specific Standards give investors the ability to compare companies in an industry sector.

  3. Company-Specific Information provide information that is unique to the company.


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Economic Value-added (EVA)

The Copenhagen Charter

Why Three-Tier Model?

To operate effectively, investors need the ability to assess the quality and sustainability of corporate performance. In the new economy, users of corporate reports want current financial data augmented by insightful information on a company's core value drivers.

To meet investors' requirements, you must understand what type of information they require and how best to communicate it.

The three-tier model proposes a framework for corporate reporting that responds to the demands of your key stakeholders. To achieve enhanced shareholder value, ValueReporting gives senior decision makers a roadmap for identifying, measuring, and reporting on real corporate value drivers. It comprises three tiers of information which represent an integrated model for improving corporate transparency.

Three Tiers of Information

These tiers are not separate, discrete reporting levels, but instead represent and integrated model for improving corporate transparency.

Tier 1: Generally Accepted Accounting Principles (GAAP)

Various GAAPs exist, however there is now a trend towards utilization of International Accounting Standards (IAS) as the preferred choice. If you wish to enhance your ability to access global capital markets, you need to provide information that conforms to internationally accepted standards in order to give investors the ability to compare your company with your international counterparts.

Tier 2: Industry-Specific Standards

Increasingly, investors want to compare companies in an industry sector by reviewing more than just information mandated by generic financial reporting standards. Your company will benefit by supplementing GAAP with industry-specific data that can be used to compare performance among peers.

Tier 3: Company-Specific Information

Certain important metrics are not included in tiers one and two as they are unique to the company. The strategy employed to exploit targeted opportunities within a specific market is one example. Such information is to be provided to investors in this tier.