Why We Need to Update Financial Reporting for the Digital Era
JUNE 8, 2018
In our recent HBR article , we argued that financial statements fail to capture the value created by modern digital companies. and (ii) how can digital firms improve their financial reports to communicate sources of value creation in their businesses? Financial capital is assumed to be virtually unlimited, while certain types of human capital are in short supply. Business students are taught to value a company based on the discounted amounts of future cash flows or earnings.