and managing Annual Shareholders Meetings,
(b)Recording and analyzing ownership of shares and bonds,
(c)Collecting and analyzing proxy votes,
(d)Annual Report design, production and text writing,
(e)Producing presentations for the financial markets,
(f)Organizing and attending meetings with investment analysts, credit rating agencies and investors,
(g)Reporting IR Activities to the Executive Committee and the Board of Directors,
(h)Reporting on Corporate Responsibility & Corporate Governance,
(i)Dealing with the financial media,
(j)Writing and distributing ad hoc corporate announcements and,
(k)Managing the corporate & IR website strategy, design and information updates.
The last point takes us to a very important issue which is the Impact of Internet on IR Activities. The author firmly believes IR has been revolutionized by the Internet. Hence, he dedicated a whole section on this impact for the readers’ benefit.
1.6 The Impact of Internet on Investor Relations Practices
a. Overview
The internet is a very important technology (Porter, 2001). It is one of the fastest developing communication channels today (Deller, Stubenrath and Weber, 1999). The internet is becoming more widely used as an integral part of companies’ IR activities (Kuperman, 2000). In the past, companies Annual Reports were the best source for company information and disclosure (Brown, 1992) whereas now a company’s website is the most important source for listed companies’ financial information (Winzell, 2006). The first step investors and analysts do to get company information is to check companies’ websites (Silver, 2004). According to Investor Relations Global Rankings (2006), companies integrate IR website to their IR programs due to several reasons including:
(a)Assisting companies in complying with regulatory requirements,
(b)Providing timely information updates,
(c)Low cost of implementation and maintenance,
(d)Maximizing the valuation of companies’ shares and,
(e)Learning more about their investors.
It is highly recommended to have an easy to use website for all audiences especially shareholders and prospective investors (Silver, 2004). According to one survey, almost 90% of investors state that websites largely affect their perceptions about companies (Thomson Financial, 2006).
In addition, IR websites result in improved efficiencies through reaching more stakeholders in less time with less effort and could result in other operational cost savings.
In one survey, the authors found that companies in USA use internet based IR more than that of those companies in UK and Germany. IR websites are used for a variety of reasons including providing financial Statements, interim reports, publishing press releases (Deller, Stubenrath and Weber, 1999), share price, and IR contact information (Andersen, 2003). Deller, Stubenrath and Weber (1999) found that internet technologies were not fully exploited in USA, UK and Germany. Hence, there is a big scope for improving the applications of internet to enhance IR websites in the three countries. It worth noting that it was found that companies’ online reporting practices are heterogeneous.
On one hand, websites are advantageous in the fact that they are dynamic and their contents can be changed instantly unlike printed materials like Annual Reports and brochures. Furthermore, websites have no size limits whereas the printed materials have their own limits in terms of size and number of pages (Marcus, 2005). On the other hand, websites come with some specific challenges (Bhojani, 2006). For example, keeping websites up-to-date is challenging. Another challenge is to focus on design of the website and ignore the contents (Silver, 2004). In other words, companies are advised not to place the cart before the horse.
b. Online Annual Reports
Online Annual Reports or Electronic Annual Reports are becoming very popular among companies and investors. According to Computershare (2008a), a leading financial market services and technology provider for the global securities industry, companies are distributing electronic copies of their Annual Reports to their shareholders to achieve several objectives including timeliness of reporting, printing cost savings, the ability to search within electronic copies and saving the environment to some extent. When it comes to cost savings, Hewlett Packard saved USD 300,000 the first year it allowed employee shareholders to elect to receive the statements electronically (Kuperman, 2000). According to Computershare (2008b), more than 80% of its survey respondents have elected to receive e-Annual Reports.
Regulators can play a significant role in driving more companies to publish their Annual Reports online. The United Kingdom Government has already issued an Act, UK Companies Act 2006, that require all listed companies to provide their annual reports on their websites (Office of Public Sector Information, 2006). The Securities & Exchange Commission (2008) in USA had issued similar rules requiring all companies to file electronic copies of their annual reports.
Some companies took a further step on the tools used above. They started publishing online Video Annual Reports (VAR). They argue these reports help shareholders get a better feel about the company and they argue these reports will replace the printed annual reports in the coming three to five years because of the cost savings and the corporate branding opportunities they carry. However, some opponents to this phenomenon argue that recent surveys suggest that the majority of shareholders still prefer printed reports (Lowengard, 2008).
In the same line, few US-Based companies including Pike Electric, California Pizza Chicken and Ruth’s Chris Steak House started using the free YouTube.com service to publish their Annual Video Reports (Snider, 2008a).
c. Blogging
One internet-based IR tool that is becoming very popular is Blogging whereby individuals share information on designated websites. Many blogs provide commentary or news on a particular subject; others function as more of personal online diaries (Wikipedia, 2008b). The Australasian Investor Relations Association (2006) had already published guidelines for listed companies on how to use Blogs which clearly shows the growing interest of using Blogging to communicate with current and potential investors. IR Professionals can read blogs of investors, analysts or the public to gain new information and market insights; in other times to disseminate information (Metzeker, 2007). Blogging is heavily used in Sun Microsystems to reach their different stakeholders (Schwartz, 2005).
Some IR Professionals at Dell consider blogging a normal extension to the available shareholders communication tools. In fact, Dell has had an official launch for its IR Blog to the financial community. Moreover, they argue it serves as a two-way communication channel between the company and its shareholders (Snider, 2008b).
d. Webcasting
Webcasting is increasing in popularity in the IR arena (Harrison, 2008). Companies are delivering live or recorded shareholders meetings and other important announcements using their websites and other service providers to reach to a bigger audience. These webcasts can be either audio or video-based. Several IROs are of the opinion that investors
