The Use of Strategic Performance Variables as Leading Indicators in Financial Analyst's Forecasts

The emerging view among managers and academicians argues for an expanded reporting system to provide more comprehensive information about organizational performance, including internal strategic performance variables. Little systematically-gathered evidence is available, however, concerning the views of the analyst community on this matter. This paper reports the results of a survey of 420 senior investment officers, directors of research and financial analysts regarding the frequency of use, predictive value, and ease of acquisition of a variety of financial and non-financial performance measures. The patterns of use that emerge from the study paint a picture in which analysts go well beyond the traditional financial measures and use a broad range of strategic leading indicators to assess long-term organizational success. The results contribute to our understanding of (1) the extent to which analysts currently use or are interested in using various strategic performance variables in addition to traditional financial performance measures, (2) the linkage between the use of performance measures and their predictive value and ease of acquisition, and (3) the information gaps which currently exist between various measures predictive usefulness and external accessibility