Mark Hynes - thoughts on corporate disclosure

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

Wednesday, March 16, 2011

And so to the ICSA Governance conference

A gathering of the great and good in this fast changing aspect of corporate reporting. I much appreciated the invitation to attend.

It was an excellent thematic discussion of many elements of the governance reporting debate, around the new guidance (developed by the ICSA for the FRC) on board effectiveness, including board decision making, composition, evaluation, and shareholder relations.

As I listened to the various contributions from the speakers, I was reminded of the 3 blind men in a room with an elephant. Each had hold of the tail, or the trunk, or a leg, and described what they thought an elephant was. Of course, none had the full perspective. However there were a number of takeaways for me.

The first was ‘how do you value the board as an asset?’ The board is almost always seen by the investors as the asset they ‘buy’, yet it is tough to assess the contribution it makes to the value of the company. Every one of the speakers agreed that a well run company was worth more than a poorly run one, but by how much? If valuing a company is about attaching a numerical value to each of the assets ultimately to create a share price, how to achieve that?

Second, much has been said about the need to defend the principle of comply or explain, against the depredations of the EU-level reviews of governance, with green papers due out soon. However, some speakers used other terms. We heard comply and explain, and explain and comply. These terms summed up a key theme for the conference –which was the avoidance of boilerplate. Telling the governance story.

And from the reporting perspective, there was some discussion around the frequent theme (in recent regulatory consultations) of technology in governance reporting. At its most basic, this implies putting ‘static’ data on the corporate website. But surely, it goes way beyond this to include interactive reporting, moving image and the use of social media? As IR Web Report highlights, a surprise YouTube hit today is Corning’s investor presentation with its amazing future vision. Whatever next; profiling the sum-of- the-parts contribution of the board through video?


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