It’s all go in the investor relations world of late. Just over a year ago we ran a cover story reporting that the rules of investor relations were changing. That no longer would it be deemed acceptable for IR officers to concentrate the bulk of their resources on the institutional audience if it meant retail investors receiving a poorer level of disclosure.
That message is really beginning to hit home. Best practice investor relations has changed massively over the last year-and-a-half. This was brought home to me this week after a discussion with a former IR officer. In his day, he was a leading IR practitioner. That makes him sound old. In fact, he left the function just two years ago but, on discussing the changes, is already feeling left behind.
It’s hardly surprising. Today’s leading practitioners are dealing with a plethora of new IR techniques that just weren’t par for the course a couple of years back. Webcasts, push e-mail, chatrooms, message boards and more. The technology helps explain the rising power of the retail investor since it makes the information flow to a diverse audience that much easier. It doesn’t solve it, though. That is the continuing challenge for today’s practitioners.
Back in the good old days you could release some results, have a chat with some journalists, do an analyst presentation and a few one-on-ones, then launch into a roadshow. That was the cutting edge of investor relations. Now best practice means ensuring that your information flow is a lot smoother to all audiences – at once.
Best practice today will be the standard practice of tomorrow. And that’s when the regulatory authorities will really start breathing down the necks of the laggards. The SEC in the States is already beating the drum with its Regulation Full Disclosure. You can expect some serious action in the not too distant future.
Again the pace of change is staggering. Regulation FD has already led to questions over companies holding one-on-one meetings with analysts and fund managers for fear of other audiences missing out on information. Site visits have also become a cause for concern. Nor is it just in the US. Confusion still exists as to the exact implications of the Australian Securities & Investments Commission’s proposals on the conduct of analyst briefings.
The danger is that what started out as a perfectly decent attempt by regulators to level the playing field between institutional and retail investors will end up with companies being scared to say anything to anybody. It is up to investor relations professionals to help regulators through these challenging times. Yes, push for free and fair access for all. But balance that with the ability to communicate. Otherwise we will end up with Regulation No Disclosure.
