According to the survey, senior executives on both sides of the Atlantic rank customers and employees as their most important stakeholders, but say their corporate reporting is light on information relevant to their needs. And although half the respondents say their company is already involved in, or planning, increased transparency, the additional information is targeted primarily to shareholders and analysts, whose needs for information were perceived as already well met.
In addition, survey respondents said analysts and activist groups have more attention paid to them than is warranted by their importance to business strategy:
 | | Very Important | | Information | ||
| | To Company's | | Needs | ||
| | Business | | Very Well | ||
| | Strategy | | Addressed | ||
| - | | | | | |
| Stakeholders | U.S. | Europe | | U.S. | Europe | |
| - | | | | | |
| • | Customers | 98% | 97% | | 68% | 66% |
| • | Employees | 88% | 98% | | 65% | 67% |
| - | | | | | |
| • | Shareholders | 72% | 85% | | 75% | 83% |
| - | | | | | |
| • | Analysts | 47% | 45% | | 61% | 59% |
| • | Activist Groups | 7% | 12% | | 14% | 15% |
| | | | | | |
“Senior executives in both the U.S. and Europe say their customers and employees are strategically more important than analysts and activists, but they are not getting either the amount or the quality of information they require,” said Dr. Robert G. Eccles, senior fellow for PricewaterhouseCoopers, and co-author of the new book, Building Public Trust—The Future Of Corporate Reporting. “On the other hand, they say analysts and activists get more attention than is warranted.”
Recently Increased Transparency—And its Beneficiaries
Nearly half of the multinational executives-- 49 percent in the U.S. and 45 percent in Europe --have either taken or planned new steps to increase transparency in their corporate reporting. But more companies on both continents are targeting incremental information to shareholders and analysts than to any other stakeholder groups.
Taking or Planning Steps To Increase Transparency To:
| | U.S. | | Europe |
| - | | | |
| • | Shareholders | 41% | | 36% |
| • | Analysts | 39% | | 37% |
| - | | | |
| • | Employees | 31% | | 21% |
| • | Customers | 18% | | 25% |
| - | | | |
| • | Activist Groups | 10% | | 12% |
“In today’s turbulent markets, corporate executives are providing more information to investors and the analysts who influence investment decisions, in hopes of gaining a competitive advantage,” noted Eccles. “However, it is a big mistake to think that the information needs of customers and employees can be ignored. Those companies that realize this as well, will be the ones that gain a competitive advantage that is sustainable over the long term.”
Characteristics of Companies Increasing Transparency
Compared to their peers, companies implementing or planning increased transparency are larger in revenues. U.S.-based businesses have a 21 percent size advantage, their European counterparts, 40 percent.
In addition, a larger number of those increasing transparency are also planning major new investments of capital over the next 12 months -- in the U.S., 47 percent, eight points higher; in Europe, 36 percent, six points higher. Specifically, more in the U.S. are expecting to make increased investments in information technology (47 percent, 20 points higher); and in Europe, 52 percent, 15 points higher.
“The early adopters of increased transparency on both sides of the Atlantic are larger, with greater investment plans, and a greater commitment to IT,” said Eccles. “These more aggressive businesses are seeking competitive advantage, and look to find it, in part, by becoming more open and forthcoming in their corporate reporting.”
PricewaterhouseCoopers’ “Management Barometer” is an established quarterly survey in the U.S. The Western European findings reported here are from the second wave of a pilot test. Countries represented include the U.K., Germany, the Netherlands, Switzerland, Belgium, France, Ireland, Luxembourg, Norway, Sweden, Italy, Austria, Denmark, and Spain. These surveys are developed and compiled with assistance from the opinion and economic research firm of BSI Global Research, Inc.
PricewaterhouseCoopers (www.pwcglobal.com) is the world's largest professional services organization. Drawing on the knowledge and skills of more than 150,000 people in 150 countries, we help our clients solve complex business problems and measurably enhance their ability to build value, manage risk and improve performance in an Internet-enabled world. PricewaterhouseCoopers refers to the member firms of the worldwide PricewaterhouseCoopers organization.
Direct questions about Management Barometer to Pete Collins, survey director and publisher, at 646-394-4496 or e-mail to: pete.collins@us.pwcglobal.com. For more information about Barometer surveys, including recent economic trend data and topical issues, visit www.barometersurveys.com
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