A quality investor relations website is a valuable dissemination tool that can inform and influence opinion. Given the size of audience that it is possible to reach, it pays to develop the most content rich site possible. Having rich, up-to-date content is key to building a quality investor relations website. The most oft cited frustration for online audiences is out-of-date information. Posting new content as soon as it is available, periodically reviewing all content for relevance and checking links to ensure that older information is still accessible are all ways to increase user satisfaction.
With increasing competition for investor dollars, a robust, user-friendly IR section can support the generation of new interest in your company while at the same time ensuring that existing shareholders have quick and easy access to the information they require. A quality IR website can also “level the playing field” among issuers as it is relatively easy (and relatively inexpensive) for a smaller issuer to provide the same level of information to investors as a larger one.
The website and all other electronic disclosure media should be considered an extension of your normal disclosure practices and are therefore subject to the same laws, rules and regulations. At least in Canada, the corporate website is not a substitute for regular continuous disclosure through an approved newswire, but rather an adjunct to proper disclosure practices. The IR section should provide a constant flow of valuable supplementary information to all investors on a regular basis, keeping them well informed and allowing them to make quality investment decisions.
Best Practices for Publishing News Releases to IR Websites:
In today’s world of instant, or real-time, information flows and with the corporate website being a go to source for the latest, verified information on any given company, more and more listed issuers are incorporating automated, real-time news release publishing to their sites. Manually uploading news releases to the website results in delays to publishing, or worse yet, omissions. Delays and omissions provide the wrong message to investors and other stakeholders – that your website is not the best place to look for the most up to date information on your company. Leading IR website vendors such as Q4 Web Systems, DisclsourePlus and others make automated, real-time news release publishing a cinch. You can also purchase the feeds for your releases direct from most newswire services.
In addition, we recommend posting all of an issuer’s news releases on the website and that releases be archived for at least a year. Archive releases by year, using specific links, rather than providing one large list that takes a long time to search.
The experience, track record, and perceived competency of a public company’s management team plays a crucial role in the investment decisions of most investors. Management is not only judged based on its performance, it’s judged based on how well it communicates that performance. This communication is a primary contributor to management’s credibility.
Credibility takes time to develop and also requires building and maintaining relationships with key stakeholders in the investment community. If relationships with these key stakeholders are part of the foundation for credibility, then every time a company communicates with these key stakeholders is an opportunity to either build, or erode, credibility. Management should adhere to five simple rules to ensure that as many of these opportunities as possible result in building, maintaining, or restoring credibility.
Rule #1 – Manage expectations
It sounds simple: Never promise what you cannot deliver. Managing the expectations of the investment community is integral to building credibility. When not managed properly, share prices can be quite volatile. Managing expectations involves knowing what to say, how much to say and when to say it. Management needs to be aware that there are benefits and risks to providing or not providing varying amounts and certain types of information to the ‘Street’. For example, providing limited and/or unspecific information provides flexibility, but may not satisfy investors’ needs in terms of measuring your performance.
Rule #2 – Set milestones or objectives
Investors require road signs beyond basic financial measures to gauge a company’s performance, especially for a smaller company, whose financial results may fluctuate or take time to develop in its early stages. Management should clearly articulate its company’s corporate milestones and other objectives within the context of the long-term business strategy to allow investors to measure their progress. With every successful achievement of a milestone, a management team builds credibility in the eyes of the investment community.
Rule #3 – Identify key performance indicators (KPIs)
How is an investor to properly evaluate the potential of a company if he or she does not know how management itself measures the Company’s success? Management should publicly communicate those key measurements that, in its mind, reflect their company’s performance. By disclosing these key measurements, known as key performance indicators (KPIs), management not only demonstrates that they really understand their business, but also provides a framework for investors to keep score from the sidelines.
Rule #4 – Be forthright in all communications
In both good times and in bad, it is crucial that management be forthright in all communications. When things are going well, communications should relate successes to milestones, key performance indicators, and execution of strategy. When a company encounters rough waters, more than at any other time, management should maintain open lines of communication, disclosing the issues, the rationale behind them and the action plans to rectify them. Companies should have well-defined crisis communications plans to ensure that the company’s executives know what to do and how to properly respond when bad news hits. Responding inappropriately during a crisis can cause irreparable damage to credibility.
Rule #5 – Provide consistent messaging
Companies have a broad range of stakeholders with which they communicate with every day – investors, analysts, suppliers, customers, and special interest groups to name a few. All company spokespeople, whether designated investor relations spokespeople or frontline workers, such as customer service representatives or sales staff, should be delivering consistent and clear messages. Inconsistent communications can cause confusion in the marketplace, posing a significant risk to credibility. A Company should have a disclosure policy in place outlining a limited number of specific people who are responsible for communicating with the investment community and financial media, with unambiguous guidelines for communications by others in the organization.
A strategic investor relations program is required to effectively build, maintain, or in some cases restore, credibility as well as to effectively convey and increase the general awareness of a company’s business prospects and strong growth opportunities. Strong management credibility can result in a higher valuation relative to peers – as the investment community attributes greater value to the likelihood of strategic growth initiatives being successfully implemented. Adhering to the five rules outlined above will help management shape the opinions of key audiences and preserve investor confidence.
Welcome to our blog. We will use this space to discuss and promote evolving best practices in the fields of public relations and financial marketing.