The state of IR in Canada is on the upswing. So say around half the respondents to our Investor Perception Study, Canada 2005. Specifically, 47 percent of the 1,163 respondents notice an improvement in the information IR departments send to the investment community. This is just one of the findings of the perception study that identifies the winners of the IR Magazine Canada Awards and gauges investor and analyst sentiment about the quality of IR in Canada.
The perception study respondent base included 240 buy-side analysts and portfolio managers and sell-side analysts based in Canada, plus 280 US-based investment professionals who cover or are invested in Canadian equities. Around 643 retail investors also participated in the study. Toronto-based Value Gap Advisors conducted the main survey with contacts for the investment community coming from Thomson Financial, while PrecisionIR carried out the retail portion of the study.
The valuation metrics investors and analysts use to measure the attractiveness of Canadian companies show free cash flow as the top-rated valuation measure. Respondents were asked if there are non-financial metrics they find useful in researching equity investments – and there is a strong consensus. The two most important intangibles are successful execution of strategy, which 94 percent of respondents say is crucial, and management capability, which is identified by 92 percent of perception study participants.
The study also reveals the investment community’s thinking on corporate governance, an increasingly important area for IR. When asked which factors related to the board of directors they feel are most vital to their evaluation of a company’s governance, respondents isolate the number of independent directors on the board and the board members’ backgrounds as key. Other governance considerations include the independence of the compensation committee and the separation of the chairman and CEO roles.
In terms of what they’re looking for from IR, the majority of perception study respondents identify accuracy of information as their number one request. They’d also like IR professionals to have a strong knowledge of their company and its sector, and to offer access to senior management.
These findings are hardly surprising: accuracy of information came top in terms of what this community demands from IR in past years. So, while their appetite for intangible information may be increasing, the chief concern among investors and analysts remains the delivery of precise information that helps inform their decision-making process.
