How to Create a Stable Shareholder Base
Investors and shareholders are looking for transparency in financial communications and investor relations.
And companies are looking for new ways to engage and grow a stable shareholder base.
So could it possible be that both companies and investors are looking for the same thing?
Market data reveals evidence companies offering greater transparency in corporate communications are valued higher than those who play their cards close to their chest.
The book ‘The Value Reporting Revolution’ by Robert Eccles warns companies that hide or withhold information are considered higher risk and provide less certainty – and subsequently less appeal – for potential investors.
Eccles demonstrates how organisations with greater disclosure can win the trust of investors and shareholders, using transparency to gain higher valuations and lower cost of capital by reducing risk.
His work revealed companies that publish key metrics and the performance data that investors consider most important are more valuable than companies with limited or restricted disclosure.
Strong performing firms are also more likely to release company earnings earlier, which prompts Eccles to suggest timing of information releases could further influence market value.
Digital investor relations tools provide companies with greater control of their corporate communications, financial reports and investor relations. Having immediate, electronic communication platforms allows corporations to broadcast information proactively and respond quickly when required.
Most importantly, digital communications put companies in control of their own content, giving them the opportunity to embrace transparency across all forms of investor relations.
But how do companies put transparency into practice? And just how transparent should they be?
Honesty is always the best policy
Market analysts and IR experts recommend open and transparent reporting of company financials and corporate communications.
This high level transparency is a growing trend among startups in the tech and SaaS space, known in the industry as ‘open startups’.
The thought of sharing live sales data with the world in real time might not appeal to everyone, but companies should consider new ways to increase transparency and diversify the information they share.
Australian medical and cosmetic cannabis company MGC Pharma appointed Interactive Investor to develop a new corporate website incorporating direct communication with stakeholders and a platform to attract new investors.
The dedicated Investor Centre on their website features real time share price, charting, financial reports, corporate governance and ASX announcements. It also allows investors to request an investor presentation which details its core strategy, introduces its leadership team, talks about its business strategy in Australia, the types of pharmaceutical products and production facilities it offers, and the Australian market scenario. All this is achieved through a highly immersive, interactive experience with a creative WHO, WHAT, WHERE and WHY navigation headings to guide the investor to the sites content.
Promote social and environmental responsibility
We live in an increasingly environmentally and socially conscious age, where corporate responsibility, governance, and both investor and consumer activism can have a major influence on the stock market.
Transparency is crucial for accurate investment analysis and assurance for stakeholders. By actively promoting ESG activities, companies can organically and effortlessly increase transparency by providing further insight into business operations.
Westfield Sustainability Report 2018 showcased highlights of the sustainability achievements for that year, including information about support programs and foundations, and carbon emission reductions.
To show your stakeholders the organisation’s strong commitment to the environment, there is the option to purchase carbon credits for your digital interactive reports. Green Reports is a platform for brands to create key sustainability messages and content for your audience.
Simplify Your Strategy
All corporate communications should be backed by a solid strategy. Social media’s ability to influence share prices is well documented, which is why strategic content planning is especially important in the era of instant communication.
But strategic planning shouldn’t mean added complications.
While it can be beneficial for a company to increase disclosure and transparency, it’s equally important not to overwhelm the reader. The days of trudging through printed reports thousands of pages long are over. Today’s stakeholders want their information direct, and digital.
Effectively engaging and communicating with investors requires a strategic, and simplified approach, delivered by digital and interactive communication tools. Each platform should prioritise user experience to ensure material is accessible, engaging and easy to understand.
Westfield’s 2016 Shareholder Review was an interactive presentation featuring responsive and parallax website design and animations. The strategy behind the project was to create a responsive online platform that was not only user friendly, but also showcased the company’s edge in digital technology and offered transparency of the year’s achievements and financial figures.
Use the right tools
IR teams are spoilt for choice with an abundance of digital resources available to them. But this can create confusion over which communications tools to employ, and how and when to use them.
Studies show forward-thinking IR measures delivered by appropriate platforms and tools are fundamental to successful IR.
As the old saying goes, it’s best not to put all your eggs in one basket. Corporations can cast a wider net by providing transparency across a range of digital platforms such as websites, social media, interactive reporting, mobile solutions and video.
Ensuring each platform is interconnected but also effective independently helps to build credibility and authenticity with readers, further supporting the development of a stable shareholder base.