Investor relations officers outside of the US are playing catch-up with their US counterparts. And the game just became a whole lot faster. This year’s Investor Relations magazine corporate IR survey (see cover story) reveals stark differences in the sophistication of IR practice between the US and the rest of the world.
No great shakes there, we hear you cry. US companies were the first to develop the investor relations function and they have never let that lead slip. The rest of the world has been playing catch-up all along, so why the big worry now?
The main concern stems from the rapid advance of the internet as an IR tool. As we say in our cover story: ‘The internet knows no borders.’ Companies across the world are being benchmarked against their US peers in IR terms. And that does not just apply to the professional financial community.
A private investor in Iowa can just as easily invest his savings into the stock of a US supermarket chain as he can into a French automotive company. Unfortunately, according to our survey, the chances are he is going to find a heck of a lot more information on the web for the US option. As we all know, information tends to aid confidence in an investment. Ask yourself where you would put your money.
The survey results indicate that US companies have become a lot more adept at using the internet to their IR advantage. Web casts, conference call transcripts, internet proxy voting will soon be the norm in the US market. That gives those companies a big advantage in attracting retail investors and overseas professional investors, too.
Many non-US companies don’t just seem to be playing catch-up, they don’t even have the leaders in their sights. Witness the number of large European companies that still do not even use conference call technology to broadcast their results to international investors. To them, using the web with any level of IR sophistication must seem like a pipe dream.
So where does this lead in the future? Just five years ago, the world’s top ten companies by market cap was a relatively international mix. Today, US large caps are dominant. Now, obviously that’s not just down to good IR – we may be advocates of the function, but we’re not going that far. Some great stories and a roaring US bull market helped things along. But telling those stories clearly and transparently definitely aids stock performance over the long term. Non-US companies had better work out how they are going to get ahead of the IR game in the future.
