EQUITY analysts in the UK say they are tired of companies using the London Stock Exchange’s Regulatory News Service (RNS) to send them non-market moving information, the Financial Times reports.
The FT analyzed company statements issued through RNS and found that listed companies are sending out twice as many announcements about contract wins or extensions as they were a decade ago.
It says many of these announcements, which have risen from 255 in 2000 to 572 last year, have a negligible impact on companies’ financial outlooks.
And it seems that analysts and fund managers are complaining about the time it takes them to review the information that is of little consequence.
The financial paper quotes two investors, Atermis fund manager Tim Steer and Arden Partners analyst Geoff Allum, questioning why companies are wasting their time with immaterial information.
Company defends practices
Software group Autonomy Corporation plc is singled out as an example for sending out 9 releases about contract agreements that provide only general information about their financial impacts.
However, the company’s investor relations head Derek Brown defends the company’s practices in a statement to the newspaper. He says they only use RNS for “market-sensitive” announcements and send less important news on PR Newswire or RNS Reach.
The LSE tells the Financial Times that while they employ editors who review company announcements and may call companies if they believe something is marketing material, the issue really is up to companies and the regulators.
Of course, the challenge for companies is that it can be difficult to determine what information investors will consider important and what they will see as marketing spin.
Considering the lack of clear definitions of materiality and the stiff penalties that follow if companies get it wrong, analysts and fund managers will probably have to get used to more bumf in their in-boxes.