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26 December 2013

EFRAG/ICAS publish literature review on the Use of Information by Capital Providers


EFRAG and ICAS commissioned the literature review to identify, consider and evaluate, from a European perspective, the existing evidence on the use of information by capital providers for decision-making and assessing stewardship.

EFRAG and ICAS believe that the IASB standard-setting process must be supported by a sound analysis and understanding of how the information that results from IFRS application is used. Indeed, the objectives of financial reporting are to provide information about an entity that reflects the results of stewardship of management and is useful to a wide range of users in making what are often fundamentally different economic decisions.

The principal conclusion of this review is that financial statements are used in different ways by various capital providers with different needs and different objectives. This reflects the differences in the nature of debt and equity securities, investors’ ability to obtain and analyse alternative information sources and different capital providers’ level of sophistication.

Commenting on the publication, Françoise Flores, EFRAG Chairman, said: “Changes to be made to financial reporting are costly for all stakeholders involved – issuers and investors more particularly - and should therefore be introduced cautiously, after having reasoned how they contribute to higher quality financial reporting, i.e. how they increase usefulness to users. This literature review provides evidence of how financial statements are used by different capital providers. Lessons are to be drawn from this for future standard-setting efforts and supplementary insights are needed where the literature review could not identify any evidence gathered yet.”

Press release



© EFRAG - European Financial Reporting Advisory Group


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