Paul Holmes 09 May 2010 // 11:00PM GMT
Leading investor relations officers are increasing disclosure and focusing on longer term information, according to a survey by international IR, financial and corporate communications consultancy Citigate Dewe Rogerson. The survey, which polled 127 leading IR directors from across Europe, reveals that while a degree of uncertainty and caution remains, confidence among IROs and companies is returning and pinpoints how companies have changed the way they communicate with investors and the challenges they face in 2010.
IROs have responded to a difficult and uncertain environment by disclosing more information. More than 50 percent of respondents have either changed their disclosure over the past 12 months or are planning to do so. And over the past 12 months, 18 percent of respondents have increased the amount of guidance they are giving, and a further 10 percent are considering increasing guidance over the next twelve months.
There are also reports of a change in emphasis toward longer term information, which suggests a switch away from short-term survival to focus on longer term prospects.
Says Michael Berkeley, executive director at CDR and head of its investor relations practice: “The strength of the stock market recovery over the past year was in stark contrast to the strength of the economy, and a key challenge will be keeping expectations aligned to company fundamentals by managing disclosure and guidance. IROs are starting to look ahead and communicate the longer term picture, but must continue to reassure investors with short-term sequential analysis.”
The past year has also seen IROs provide additional information on a company’s debt position, with 41 percent taking such action. The extra disclosure reflects a continuing squeeze on bank lending coupled with strong competition in the bond markets, forcing companies to work hard to make their case for borrowing. However, 59 percent of respondents do not think debt has become one of the mainstream activities within the IR role. The issue is unlikely to disappear and the challenge for IROs who have increased their focus on debt disclosure following the credit crunch is to maintain it.
IROs are dealing with a wider range of corporate governance issues. Over the past year, 42 percent of respondents said they had been asked more questions on risk management, 34 percent of respondents received more questions on remuneration policies and 17 percent of respondents said they had received more questions on board structures and responsibilities.
Finally, 60 percent of respondents have changed or are planning to change their mix of communication channels and they are increasing communication through at least one channel. The biggest change in the communication mix is represented by more “one-to-one” conversations, cited by 41 percent of respondents, followed by more roadshows and capital market days. And 39 percent of respondents have increased or are planning to increase the number of investor and analyst events.