When I went through the whole chapter on investor relations, I realised that communication of the company’s performance through intermediaries is the key to having a sound investor relationship whether through the media, agencies, or the analysts. It seems that the media play a key role in investor relations with companies and therefore most companies would go to great lengths in having a good relationship with media houses in order for its image to remain reputable.
Its also interesting to see how the internet phenomenon has influenced the way companies announces their annual performance reports. It’s evident that the internet continues to play a key role in the way companies release their financial results. One question that really bothered me when I went through the whole chapter is why most companies (over 80%) still release the print version of their performance reports. I think, its more expensive to make a print version of it than to have the online version which can be viewed by millions of people across the globe. From my understanding, the printed document is sent to a limited number of investors who mostly are the shareholders and not everybody in the public domain, whereas on the other hand, online financial reports can be viewed by many millions of people who browse the internet everyday. Thus, from this perspective I would think that, most potential investors are more likely to view the online version of the financial reports.
Another interesting thing that I noted from the chapter is about individual and institutional inves
tors. I must appreciate that as a matter of fact most companies focus more on institutional investors because they invest on long term other than short term and this therefore would make the prices of the company’s stocks become volatile. I think its for this reason that institutional investors hold more stocks in the
One case scenario is back in my country where I come from where the stock market is relatively not developed, there happened to be this company that offered stocks to the public, and due to intense media coverage, there were massive oversubscription of the stocks whereby in addition to institutional investors many individual investors applied for the stocks. These individual investors main reason was to sell the shares when the prices goes up, so immediately the initial public offer was over they started selling the shares and the stocks prices went down. For the next couple of months the company’s stock prices were trading below the initial offer price. More over, the company was faced with an uphill task of organizing an annual general meeting because of the large number of individual stock holders. The venue and other logistics for the annual general meeting became a nightmare for the company because of the large number of individual investors. This posed a great challenge to the company in terms of costs of holding such an annual general meeting. Its for this reason, therefore, I think many companies would rather wish to have institutional investors than individual investors…
I agree with your point about the reports, it seems strange that they print them. They could save lots of money by reporting everything electronically.
ReplyDeleteI agree as well about just having annual reports available electronically instead of printing so many of them. Since I work at the bank I see first hand how many annual reports are sent to us. The annual reports take up so much room that could be used for something else. I know there are people who like to look at them from beginning to end. I also think that if people want to compare different annual reports, it may be easier to do it if you have them right in front of you in paper form. Otherwise, you may have to flip back and forth on the computer, opening different screens, so it may take more time this way.
ReplyDeleteI know that where I work, we are all trying to go paperless. It might be something that is unreachable, but the effort is made to save on paper. It would be an socially responsible effort as well.
ReplyDeleteI agree that things in this day and age should be paperless. There is really no need for companies to make hard copies of this information when it can be accessed off of online from any computer. There is not need to do this and makes much more sense to make this document avalible online to anyone who would like to view it.
ReplyDeleteKayla Herron
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ReplyDeleteI think there should be both print and online versions of reports. However, companies should keep balance between these two in order to maintain cost efficient. We all see that even internet help us rapidly access to all kinds of information, why do people still need newspaper everyday? There should be choices for investors to choose which they want the most.
ReplyDeleteIn my opinion, even as more companies post their annual reports online, it does not mean that the hard-copy version should go away. According to National Investor Relations surveys, 95% of its 5,000 member companies posted annual reports online in 2005, yet 88% still produced a paper version as well. Executives surveyed by Roper Starch ranked the printed annual report as the single most important document their company produces.
ReplyDeleteI would agree that striking a balance between print and online reports would be the ideal way to go. The key would be not printing any more than is needed because this is one area that speaks to social reponsibility.
ReplyDeleteOne of the main points that I found that was interesting from the article, was that 80% of companies print their annual reports. I see this first hand working at the bank. Not only do we print a lot of annual reports, but we waste so much paper.
ReplyDeleteHowever, I can see why the companies are not getting rid of this habit. It is very easy to analyze stuff when it is on paper.
Concerning the paper issue, I might be wrong, but I think it was under discussion between the SEC and some huge american companies ("Focus on ethic" in the BLAW textbook). Some companies are arguing in favor of paper, because it is supposedly safer: you can dispatch your information to a controlled number of people and it is easier to keep a copy of it. On the other hand, environmentally friendly associations want to stop the waste of paper.
ReplyDeleteThis article was concluding that the SEC wanted to give the shareholders/investors the choice, the electronic version should be adopted unless the contrary is asked. I guess because most of the current investors are still from the previous generation, with less trust in computers and the Internet, it is better to move forward with a slow transition.
I agree that the internet has really helped small time investors when it comes to doing their due diligence. These individual investors now have easy access to all a companies financial data. It is available not only on a company's website, but also at the Securities and Exchange Commission's website, www.sec.gov.
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