A SURVEY of investment industry professionals’ views on Swedish investor relations practices has yielded some surprisingly frank responses, including that they don’t care much about CSR issues and think some IROs are token employees who can do little more than pour coffee.
The 10-question survey, which attracted 106 respondents in April and May, was conducted by IR consulting firm Box IR, which readily admits that respondents might not have been as forthright if the survey hadn’t been anonymous.
Other somewhat surprising findings include that less than half of the respondents rate annual reports as important or very important, that a company’s market capitalization and stock liquidity are the most important factors in an investment decision, and that an informative IR website ranks among the top three investment sources for respondents.
Most important investor or coverage criteria
Asked to rank the three most important factors in their investment or coverage decisions, CSR issues ranked the lowest, with only 3 respondents rating it as one of their three most important factors.
In a report presenting the survey’s findings, Box IR’s Mikael Zillén and Tomas Öqvist say that while other surveys have highlighted CSR as a key investment criterion and there are many investment funds in Sweden focused on such factors, there’s a certain level of “political correctness” at play.
Respondents rated the most important investment criteria as a company’s market-cap and stock liquidity, followed by growth prospects and good management. This suggests that well-run small companies with good growth prospects are being screened out by portfolio managers and analysts on purely technical grounds.
In general, respondents said their access to management at larger companies was less than at mid- and small-cap companies, but that the quality of IR at large-caps was better than at smaller companies.
Good investor relations and communications practices ranked on a par with a company’s investment case and valuation issues. Asked to rank the qualities that make up good investor relations, respondents put “accessibility” to the market at the top of the list, followed by knowledge of the company and it’s industry.
However, it is in their free-form comments where analysts provided the most direct and controversial responses, with one describing a poor IRO as:
“Only pouring coffee during presentations; cannot do a good company presentation by themselves. Unfortunately, in order to fulfill the female quota, they have put in a ‘blonde’ as IR and it is not sufficient!”
Most important IR activities
The most important investor relations activities are one-on-ones, earnings presentations and company IR websites, in that order. Fully 70% of the financial market professionals ranked IR websites as important or very important.
Social media ranked as least important, but the authors say this is “partly due to the fact that Swedish companies are not very active in terms of using social media for IR purposes.”
The survey found that annual reports were the third least important IR activities, despite the fact that Swedish companies continue to spend large sums to produce them each year. In free-form comments, respondents stated a preference for annual reports in PDF and expressed a strong dislike of reports in Flash and even HTML.
One analyst is quoted as saying: ”All companies that have their annual report on its website in any other format than PDF should immediately stop this. I am not interested in any Flash based version which is completely user unfriendly. PDF is the best, period.”
An executive summary of the survey’s key findings is available on SlideShare.