Mål der flytter markedet: Anvendelsen af alternative performance measures blandt danske virksomheder

Martin Westphal Hansen

Student thesis: Master thesis


The use of alternative performance measure (APMs) among companies has been subject to increased scrutiny over the recent years. Several international organisations have expressed their concerns based on the increased use of APMs in the annual reports. Given their alternative nature the indicators do not fall within the scope of the IFRS accounting principles and therefore not audited by an independent party. The reporting of APMs are to be seen as additional voluntary disclosure but the company shall only disclose the incremental information if it is relevant and provide a more detailed view of the core business. The literature identifies two (conflicting) reporting motives (i) the provided information is incremental and more value relevant to the investor and (ii) managers can emphasize the disclosed information with an underlying manipulative or strategic objective. In order to retrieve a full understanding of the various effects a literature review will assess (i) what motives drives the reporting of APMs (ii) how the reporting of APMs can influence the investors judgement (iii) to what extent regulation has an impact on the incentive to disclose APMs (iv) what factors that are associated with credibility. By determining firm specific measures I find that companies reporting APMs on average has significantly higher revenue, a higher level of operational expenses, a higher share of institutional investors and a higher number of following analysts. In addition to this, the result shows that the companies that do not report APMs have a significant higher share of insiders. The fact that APM reporting companies have a significantly higher share of institutional owners and following analysts we could, according to theory, expect a more informative reporting. In order to assess the quality of the reported APMs I have, based on a review of several international guidelines, constructed a disclosure index. I find the overall level of disclosed APMs to be of good quality. But part from this, I have identified some areas of concern. For some of the reported APMs a clearly lack of transparency is absent. A tabulated reconciliation between the original GAAP indicator and adjusted APM 2 would be beneficial to the investor. Furthermore I find the APM reporting companies to be in a bit of a dilemma. The international guidelines states that reported APM may not be presented with higher prominence than the equivalents GAAP indicator. The fact that the purpose of reporting APMs is to provide private information to the investor I see a certain risk of the APM losing its relevance if it is being reported with the same prominence as the equivalent GAAP indicator.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2015
Number of pages142