ALTERNATIVE PERFORMANCE MEASURES AND IFRS 18 PERFORMANCE MEASURES: A COMPARATIVE ANALYSIS

Abstract

This article investigates the practical application of Alternative Performance Measures (APMs) disclosed by entities listed on European stock exchanges, specifically those reported outside the scope of IFRS financial statements. APMs are systematized based on their managerial intent during investor communication. The research evaluates the conceptual and methodological requirements established by the European Securities and Markets Authority (ESMA), identifying characteristic shortcomings in current disclosure practices. To illustrate these challenges, the study utilizes empirical data from the annual reports of Ukrainian companies listed on the Warsaw Stock Exchange.
A comprehensive comparative analysis is conducted between the ESMA-defined APM system and the financial performance measures introduced by the new IFRS 18 standard. The comparison utilizes several criteria, including mandatory application, disclosure principles, submission formats, and reliability confirmation. The study concludes that Management-defined Performance Measures (MPMs) represent a specialized subset of financial APMs. Under the new standard, these measures are transferred to the notes of financial statements and are subsequently subject to formal audit procedures as part of the primary reporting package.
The findings suggest that compliance with IFRS 18 requirements for MPMs will compel companies to critically analyze the relevance of their disclosures to investors. Furthermore, entities must carefully assess the cost-benefit ratio of such reporting due to the significant increase in preparation and audit expenses. Ultimately, the integration of MPMs into the audited framework marks a significant shift toward greater transparency and standardization in corporate financial reporting, fostering higher investor confidence in the reliability of disclosed performance metrics.