The Income Statement's "Hidden" Stakeholders

• In Event: Reception with ELS Posters
  In Poster Session: Research Poster Session I and Friday Reception

Abstract

ABSTRACT
For years financial analysts and company executives have focused primarily on two line items of the income statement – the top and bottom or sales and net income. The expectation, of course, was that both would grow at a predictable rate. If there was any thought about other line items appearing on the income statement, it was how they could be reduced through improved efficiency or otherwise. While the stock market often rewards those companies who reduce their costs, there appeared to be little consideration of the impact on the parties represented in those line items. This paper first discusses how various stakeholders are “hidden” in the numbers and how decisions impact those stakeholders.

We continue by exploring how numerous organizations are now expanding their decisions to consider the long-term impact by delving deeper into what is included in the middle-of-the income statement line items and expanding their sphere of influence. A good example is Unilever’s recent commitment: “By 2020 it aims to help more than a billion people take action to improve their health and wellbeing, halve the environmental footprint of its products, source 100% of its agricultural raw materials sustainably, and link more than half a million smallholder farmers and small-scale distributors to its supply chain.” Unilever’s CEO, Paul Polman believes that “growth at any cost is not viable. We have to develop new ways of doing business which increase the positive social benefits arising from Unilever's activities while reducing our environmental impacts. We want to be sustainable in every sense of the word." [Accessed at http://www.guardian.co.uk/sustainable-business/unilever-sustainable-living-plan]

We will conclude by discussing ways an organization might gain a better sense of what is included in various income statement line items.

Author

• Kate Lancaster, Humboldt State University