Perception impacts stock prices, doh!

CAN you move your stock price by simply changing your key messages or emphasizing your company’s innovation or corporate social responsibility practices?

BusinessWeek devotes a lot of space in its July 9 issue to exploring the question. The article details how some big companies are spending in the region of $2 million per year to quantify the impact of public perceptions on their share prices.

And it attempts to explain how researchers and consultants aim to quantify the impact of reputation on financial performance — the holy grail of communications.

The best part of the article for me is this lovely quote from a company that has bought one such study:

“Echo’s research was considered an expensive expression of what was abundantly obvious to anyone with eyes in their head,” says Nigel Fairbrass, SABMiller’s media-relations chief. “While I would acknowledge that an ability to specifically evaluate PR activity in stock value sounds seductive, it betrays a misapprehension of the complexities and inefficiencies of equity markets.”

I’m guessing Mr. Fairbrass wasn’t responsible for hiring Echo to do the study. But it still begs the question, if it is was so bloody obvious, why did SABMiller waste shareholders’ money on it?

Anyone else perceive SABMiller as being just a little too loose with the shareholders’ funds? How many pence should be knock off the stock to compensate?

Dominic Jones

Dominic Jones (bio) created IR Web Report in 2001. He is a consultant to leading public companies and investor relations service providers worldwide. You can contact him via the contacts page.