A year after the IIRF’s 1995 conference in Frankfurt, investor relations practitioners from all over the world are gathering again in Milan. The pace of change facing those practitioners remains as fast as ever, the nature of that change as paradoxical as ever.
It is a truism that technological advances break down barriers, including national boundaries. And the World Wide Web is as good an example of that as any other. In the last year, the number of companies putting up financial and corporate information onto their sites on the Web has grown exponentially, and by all accounts will continue to do so.
That should – indeed it does – make it possible for companies to disseminate information to all their investors and analysts, regardless of their geographical location (provided they are awake) at exactly the same time. But in practice this has not been the most significant impact of Web sites on investor relations – not yet, anyway. Study after study confirms that the audiences visiting corporate sites are typically customers and retail investors, not the sophisticated global institutions. So the Web’s key impact for investor relations, for now at least, looks like being the rehabilitation of the individual investor, by bringing down the cost of servicing their needs and dramatically improving their access to shareholder information.
That was always foreseen, of course. But did any of us guess that Web technology would be responsible for setting back the march towards increased global diversification of portfolios? For the irony is that while it may be the means by which global securities markets will eventually become reality, it also turned out to be the instrument responsible for driving institutional investors back home.
I’m referring, of course, to Netscape and all the other Web-related businesses that fuelled the mid-1990s US bull market, itself largely a product of the IPO boom driven by the scramble to get in on the groundfloor of investment in the new tech stocks. And it was that 1995 bull run – aided and abetted, admittedly, by the disaffection for emerging markets following the peso crisis – that brought US money back to America.
One lesson from this is that the impact of technology continues to catch us unawares. After all, only ten years ago we still thought information technology was about storage and manipulation of information – word-processing, spreadsheeting, databases. Now we know it’s about communicating that information.
And since investor relations is about communicating information, too, we cannot escape its crucial importance to the practice of IR. Nor can we opt out of trying to forecast what its impact will be in the future, however futile that task may sometimes seem.
