Research shows that the quality of narrative disclosure can be directly linked to a company’s cost of capital
All listed companies’ communications exist under the same constraint: say enough to be understood but not so much that you over-claim. RNS rules, disclosure obligations, prospectus rules, nominated advisors (NOMADs), all of them act as guardrails against saying more than is true, which is vital.
However, guardrails don’t make the truth resonate with prospective stakeholders: this is a separate job, it sits within brand. A coherent brand and communications strategy should signal trust and support a narrative, yet brand is rarely treated as a commercial lever for building investor confidence inside a regulatory framework.
Investors, analysts and NOMADs read identity as a proxy for competence, this is supported by UK research published in the European Accounting Review, analyzing a large sample of listed firms; they found a direct link between the quality of narrative disclosure and a company’s cost of equity capital. Too little narrative, and investors price in uncertainty yet too much unfocused narrative, aka clutter, and the cost rises again.
There’s a sweet spot, and companies that find it measurably lower their cost of capital. Indistinguishable = forgettable, and forgettable is expensive when you’re one of thousands of companies competing for attention at the very moment you need capital.
What this looks like in practice
For IR teams, the opportunity sits in three places:
- Consistency across your own touch points. Pull up your last RNS, your website, your investor one-pager, your company presentation and your LinkedIn page side by side. If they don’t look and sound like they came from the same place, you’re diluting a trust signal every time you publish. In contrast, an investor who sees that same considered identity across touchpoints over a few years aligns consistency with evidence of long-term thinking. It’s why visual and messaging consistency is worth auditing with the same rigor that your legal team applies.
- Brief your partners like insiders. Whoever designs and writes your materials, get them on an NDA and ensure they understand the investment case just as well as your broker does. Clutter is the visual equivalent of a bloated RNS: technically compliant but practically unreadable, eroding the very trust it’s supposed to build. Every piece of material should have a purpose and signal We know exactly who we are, what we’re doing, where we’re going and why you should take note. Don’t over-complicate it, don’t over-explain it and back it with evidence, numbers and facts.
- Treat refresh and identity decisions like disclosure decisions. Brand is a compounding asset and it’s very different from a campaign with a start and end date. Every touchpoint that looks like it came from the same considered place subliminally aids trust. Only revisit identity when the business strategy has genuinely shifted whether that be a C-suite change, a merger, a directional pivot, anything of note with rationale, but a shiny new brand will not paper over the cracks. A decent external partner will ask probing questions to check a rebrand is the right call. Don’t commission anyone who doesn’t ask why or dig deeper.
Brand and strong investor comms shouldn’t be filed under marketing capex. It requires understanding what’s distinct about the business, pairing that with the numbers to make the investment case and having the discipline to build a system around it that delivers compliant, consistent, concise and context-abundant communications to the right audiences.
IR teams are increasingly waking up to this, with 69 percent now ranking storytelling among their top communications priorities, recognizing that companies who invest in it stand out in a crowded market and tend to attract higher-quality, longer-term investors. Treated properly, brand is an asset that appreciates.
Katie Moran is a Director at Create Inc, a UK-based brand and communications consultancy.
