Performance in the Economical and Financial Communication of the Entity: Cognitive Potential and Limitations

Abstract

Continuous evaluation of economical and financial performances represents a challenge and, at the same time, an almost obsessing motivation for the managerul of any entity, who wishes to develop balanced contractual relations with his/her partners and to maintain his/her position on the long run on a competitive and ever more internationalized market. This challenge becomes real through the use of financial reports. Their objective is to ensure an efficient dialog between the entity and the stakeholder, offering quality information and allowing relevant judgements, which are extremely necessary for the business partners. The International Financial Reporting Standards make the stock exchange investor a privileged receiver of correct and clear financial information that expresses unconventional realities regarding the performance reported by the issuers. This demands an increase of the degree of professionalizing and responsibility of auditors and managers regarding the quality and reliability of the financial situations stated on the financial market. For the investors, however, the information in the financial statements reflect the static and hypothetic dimension of performance, especially because of the conventions specific to the commitment accountability. This paper starts with presening representative approaches and points of view on the concept of performance, in the theory and practice of economics. Then, it states rationally and with arguments that in order to obtain a complete view in the performance of an entity and to reduce informational asymmetry, it is necessary to reconsider the concept of performance and to generalize the multi-criterial quantification of performance in an integrated financial and non-financial view. The paper presents according to their evolution, from classical to modern times, the criteria for measuring performance, emphasizing their valences and limitations for economical and financial communication. It does not forget the fact that the entities operating in the areas responsible for the destruction of the environment aer subject to growing pressions from the stakeholders to communicate the performances in what concerns the continuity of their development, in the three dimensions: economical, social, and environmental. After the process of investigation and comparative analysis of the studies elaborated at the national and international level regarding the researched topic, the paper refers to the criteria for measuring performance in the practice of Romanian entities, in correlation with the evolution of the business environment and to the openness towards global economy.

Keywords: global performance, financial and non-financial, financial communication,informational asymmetry

JEL Classification: M13, M21, O12