A STUDY has found a gap between what financial analysts rate as most important and what companies listed on the Istanbul Stock Exchange (ISE) actually provide on their investor relations websites.
Accounting professor Asli Turel of the Istanbul University School of Business surveyed analysts on what they consider to be the 15 most important items for companies to provide on their IR websites. She then analyzed what information 98 randomly selected ISE companies actually provide against a checklist of 50 items.
“To promote confidence and encourage investors to invest in Turkey, companies should meet stakeholders’ demands for transparent and timely financial information. The internet can provide better and more effective ways of communicating financial information,” writes Turel.
Key gaps include analyst research reports and contact info
The results of Turel’s research showed that Turkish companies generally scored poorly against the checklist, with financial sector companies scoring significantly better than companies in other sectors. The best performing companies were Koç Holding A.Ş. and Halkbank in the financials sector, and Boyner among non-financials.
When comparing the content of the companies’ websites with what the 56 financial analysts rated as most important, the significant gaps included:
- Analyst research reports;
- Phone numbers for investor relations;
- Segmental reporting;
- Financial data in spreadsheets or XBRL; and,
- Summary financial data.
It is intriguing that analysts rate having access to analyst reports on company websites as the most important item companies can provide. It suggests that Turkish analysts either do not have access to their peers’ research reports, or they want company websites to be used as a channel to market their research to the buy-side.
From a legal standpoint, publishing analyst research reports on company websites would be problematic in many countries. Companies incur substantial risk in explicitly or even implicitly endorsing analyst projections and share price targets.
The other gaps are somewhat predictable. Contact information for IR departments is often inadequate, and analysts almost always say they want more segmental reporting.
Areas in the study where the companies met or exceeded the expectations of analysts included:
- Shareholder structure;
- English version of homepages;
- One click to get to investors relations;
- Annual report in PDF format;
- Annual reports for the past 3 years;
- E-mail to investor relations;
- English version of annual reports; and,
- Name of investor relations officer.
Turel says the Capital Market Board of Turkey should consider introducing guidelines for online investor relations information beyond the current requirement for companies to make their annual reports, annual and interim financial statements and audit reports publicly available in an easily accessible manner for at least 5 years.
“The lack of formal guidance and the huge differences in the nature and extent of financial reporting on the web are likely to raise issues concerning the comparability and reliability of data. The appropriate action to reduce these expectations might be introducing guidelines that provide corporations a framework within which the exchange of financial and non-financial data can take place with maximum of efficiency,” she writes.
The study is The Expectation Gap in Internet Financial Reporting: Evidence from an Emerging Capital Market (PDF 400KB, 14 pages) and is published in the December 2010 issue of Middle Eastern Economics and Finance