Mark Hynes - thoughts on corporate disclosure

Opinions on changing rules, changing best practices, and their effect on investor relations officers.

Thursday, May 14, 2009

It's that word again - transparency

It has been impossible to turn on the TV this week without hearing that ‘transparency’ is needed. The theme that public companies have been used to for many years – the demand for greater insight in to their affairs – has come home to our lawmakers.

I had a very interesting discussion early this week with a senior IR person who had been through a tough baptism into IR. She had taken the IR reins a few years ago at a company going through significant turmoil. Products were out of date and new ones not yet arrived; the share price was tumbling, each set of results produced further downgrades, and the (generally very supportive) long investors were getting concerned. And the financial profile of the company started looking attractive to new value investors.

I wanted to know more about this for a strategic IR course I am running in June for some East European IR directors. There were a number of lessons that emerged from this case study, but one that stands out was the decision to expand their disclosures. Putting more information into the public domain was a conscious decision, and aimed at supporting existing holders, providing insight to the sell side and to potential new investors.

The result was good news, and the company went on to great things.

I was reminded of this theme in reading the very helpful survey published by Citigate Dewe Rogerson. A key focus of the survey was on disclosure and guidance, where the survey reported that over 40% of companies have increased their disclosures over the past year and 28% plan to increase disclosure this year. And more companies are, according to the survey, offering ‘guidance’. This is very much European style guidance – focussing on non financial value drivers – rather than US style EPS point and figure guidance.

Telling the company story has never been more important. And no doubt our lawmakers will get there soon.


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