Investor Relations today is critical for public-listed companies. The 5Cs of Investor Relations highlight what is important for these companies to build up investor confidence and trust, and ultimately, this translates into sustainable shareholder value.
An IPO is like a marriage between a company and the equity market, after that, good communication makes it work. Investor Relations, at the end of the day, can be boiled down to proactively communicating and performing. Sounds simple? Yet some companies can still wonder why investors don’t know them especially when all their information is on their website. Companies need to communicate because the competition for attention today is intense in a global village. This is more so for capital, which can move to anywhere in the world in a blink of an eye and with one keystroke.
Always let your messages be clear, whether you are talking about your strategy, growth drivers, industry trends, inflexion points, core competencies, risks etc. By coming across clearly, you demonstrate your mastery of the subject matter as well as come across as having nothing to hide. Having clarity while communicating saves time, as it allows investors to focus on what is relevant to them, and importantly decide whether or not to acquire a stake in your company.
Many companies only think about Investor Relations when they typically feel unappreciated by the market. However, once companies start this journey, it is equally important to maintain continuity. It also does make sense and do it in an ad hoc manner as it may be counter-productive. Investors often complain that companies only want to see them when they want to raise money but later shy away or hide when times are not great. In fact, it is when times are difficult, that companies can gain mindshare by being accessible and accountable. It is an excellent opportunity to build investor confidence.
Nothing unravels confidence more when a company’s messages are not consistent. As investors rely on multiple information sources, messages cannot be contradictory and information needs to be constantly updated. Consistency is a key theme in Investor Relations. Market-sensitive information has to be consistently delivered to all parties at the same time, rather than to risk running afoul of disclosure rules. Ideally, a company should also demonstrate consistent financial performance in line with their outlook. The Investor Relations mantra is always – “better to consistently under-promise and over-deliver, rather than the other way around”.
In addition to customers, staff and their general public image, companies also have to show that they care about their shareholders, and not just the large ones. Companies that care about shareholder interests, tend to have a very supportive shareholder base. This is all the more so when company and shareholder interests are aligned. Even simple things like running an interactive AGM, establishing proper protocols to deal with shareholder engagement, using the right tone and manner in addressing concerns, being a good corporate citizen etc, all add up to show shareholders that the company cares.
Reproduced with the kind permission of the author Gerald Woon: