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City Judges on Honesty and Performance | December 2 2002 |
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City analysts and investors are increasingly judging companies on their honesty and integrity, according to a new report by MORI and the Investor Relations Society (IRS). Around one-third (34%) of analysts and half of investors (46%) judge senior management on these criteria - a rise of 11% and 3% on last year. Openness continues to be the number one factor contributing to outstanding relations with the financial community (cited by 49% of analysts and 44% of investors). Full disclosure of strategy and accounts have escalated in importance in the last year, with one-fifth more analysts demanding disclosure of accounts, and one-tenth more investors disclosure of strategy. 'In today's climate of uncertainty and suspicion, a culture of corporate openness and honesty is vital,' comments Roger Stubbs, head of MORI's investor relations practice. 'As well as avoiding 'spin', senior management must be available to respond to the City's questions, and prepared to answer them more fully than ever before.' Encouragingly, the report shows companies are responding to the City's demands. Almost half of analysts and investors (45% and 44% respectively) say the FSA's new enforcement powers on disclosure have increased the information they receive from listed companies. Importantly, they agree (by a ratio of two to one) that this information is more useful to them. The report also shows the City is looking for evidence of solid market performance. For the first time in 20 years, financial performance has overtaken quality of management as the key factor by which analysts judge companies. Furthermore, cash flow and market position have become significantly more important factors (mentioned by around a fifth more analysts and investors). Two-fifths (40%) of investors and two-thirds (68%) of analysts believe the quality of corporate investor relations has increased in the last two years. IRS chairman Richard Bowler believes its new report can help investor relations professionals deliver even more effectively. 'In the current climate, effective corporate communication is more essential than ever if a company is to successfully explain its story to the wider financial community. Companies have an opportunity to build competitive advantage from the findings presented in this report.' MORI conducted face-to-face interviews among 96 investors, and telephone interviews with 68 analysts, between 17 June-3 September 2002. This survey is one of a number in MORI's Key Audience Research series. (See http//www.mori.com/kar for full details.) Simple printable version of this article. Email this article to a friend.
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