The first half of 2002 has been, in many ways, a reaction to the last half of 2001 when global economic recession and corporate scandal set the stage for an all-time low in investor confidence. IR professionals needed time to assess the crisis in shareholder trust and find ways to address it head on.
Now that IROs have identified areas that need work, the question is what to do first. Rebuilding shareholder trust will need a careful blend of full, fair disclosure, accounting transparency, auditor independence, plain English, a clear policy on corporate governance, independent sell-side research and CEOs who shareholders trust. While many IROs may have already addressed these issues, investors may not know it. So communicating a solid IR program – the IR of IR – is the other half of the battle.
As we head into what promises to be a long, hot summer – at least for those companies currently being grilled about their accounting methods – IROs are being handed new tools to help rebuild investor confidence.
In the US, Niri has been proactively schooling its members about best practice. At the end of April, the institute released a more rigorous code of ethics for investor relations professionals and new guidance on restricted access discussions surrounding news announcements. In the same month, Niri announced a ten-point program to help restore investor confidence that included ‘window periods’ for insiders to buy and sell company stock. In May Niri held a symposium on how IROs can restore confidence in the markets. And this month Niri holds its annual conference, June 2-5 in Palm Desert, California, where the education continues.
Meanwhile, regulators, industry associations and government bodies have been gearing up to dramatically change the regulatory environment in which US-based IROs operate. And since US regulatory standards and best practice set the tone for the rest of the world, it’s fair to say things are changing for IR professionals everywhere.
Luckily, as the winners of the Investor Relations Magazine US Awards 2002 attest, building investor confidence on Wall Street has little to do with boosting share price (see Standing out in tough times). Many of this year’s winners saw their stocks fall in 2001 but were still given top marks for their IR efforts. Transparency, honesty, and credibility are the characteristics the Street rewards IROs for. Now if only retail investors could follow that logic a little more.
