THE North American investor relations associations appear to be putting web-based disclosure on the front burner as the Internet moves to center stage and securities regulators increasingly rely on corporate websites to deliver information to investors.
Earlier this week, Jeff Morgan, the new President and CEO of the National Investor Relations Institute (NIRI), called to let me know that IR website best practices are very much on his agenda. He was responding to my long post last Friday about the problems around e-proxy in the US and the need for NIRI and others to promote best practices for online investor communications.
At the time I was writing the post, NIRI was in Washington meeting with the Securities and Exchange Commission’s Advisory Committee on Improvements to Financial Reporting to discuss how to improve online financial reporting practices. The fact that the issues are being discussed at such a high level proves how important they are.
I’m hoping to communicate more with Jeff in the future, but it’s clear to me NIRI’s new leader understands why effective web practices are strategically important to the investor relations profession and to the securities system generally. The challenge will be getting that message out to the membership in a way that resonates.
CIRI issues new guide for online reporting best practices
On Tuesday, I got a call from Sylvia Biggs, Vice President of Professional Development and Membership at the Canadian Investor Relations Institute (CIRI). They have jointly published with the Canadian Institute of Chartered Accountants (CICA) a “discussion brief” about online investor communications best practices.
|CIRI and the CICA are stressing the strategic nature of online financial reporting.|
The 20-page document (PDF 339KB) is a high-level guide for companies on the components of an effective IR website. My favorite paragraph from the guide is this one (emphasis added):
“Business and financial reporting information provided on a website needs to be relevant, current, complete, clear, and well-organized. This is a strategic issue and requires the same degree of deliberation as any other strategic area of a business. Developing a good strategy involves giving careful thought to how to effectively present information for an online audience. It is important that companies incorporate electronic disclosures in their overall policies with regard to corporate disclosure of information to investors.”
The rest of the guide goes on to explain at a high level the key components of an effective IR website. I think it is an excellent starting point for any IRO. It emphasizes the right things, from the importance of telling the company’s big picture story to paying attention to those small details that matter.
Speaking of small details, there’s a great list of bullet points in the guide about “linking.” That might seem arcane on the face of it, but linking is core to how the web works. Without links there would be no web.
Among other things, the guide suggests that companies:
- Use different colors to identify visited and unvisited links (as we’ve mentioned before);
- Provide links between financial statements and the notes and MD&A abstracts (see our piece from last November);
- Link to “useful third-party sites” including industry associations (our coverage); and,
- Avoid putting navigation in pull-down or other menus that require mouse action to view the options, a topic we’ve mentioned in various places over the years.
CIRI has invited me to participate in a webinar later this month to talk about the practices recommended in the discussion brief. I’m looking forward to doing that and will provide details later.
I can’t write about guides without also mentioning the UK IR Society’s updated best practice guides for IR websites (PDF 68KB, 12 pages), annual reports (PDF 424KB, 16 pages) and online investor presentations (PDF 45KB, 4 pages). All should be read by anyone interested in providing better online investor communications.
A few laps behind peers in other professions
That the IR and accounting professions are stressing the strategic importance of effective online reporting indicates that we are finally moving on from seeing IR websites as either mere compliance obligations or as places for web designers to show off.
Securities regulators are increasingly relying on the web to deliver information to investors, and investors worldwide are gaining access to new ways of receiving information and insight. An entire new generation of analysts are coming to the workforce having never known life without the web.
In such an environment, IR professionals must realize that their knowledge of web communications best practices is a strategic asset to themselves, their profession, and to the companies they serve.
The good news is that their professional associations seem to be on the case. The bad news is that they may be a few laps behind their peers in other professions.