In this study we investigate the usefulness of financial information to investors in comparison to the total information in the marketplace.1 Our evidence indicates that the usefulness of reported earnings, cash flows, and book (equity) values has been deteriorating over the past 20 years. We document that this deterioration in usefulness, in the face of both increasing investor demand for relevant information and persistent regulator efforts to improve the quality and timeliness of financial information, is due to change. Whether driven by innovation, competition, or deregulation, the impact of change on firms' operations and economic conditions is not adequately reflected by the current reporting system. The large investments that generally drive change, such as restructuring costs and R&D expenditures, are immediately expensed, while the benefits of change are recorded later and are not matched with