In a World Where the “News Cycle,” Both Real and Fake, is 24/7, How Can Companies be Their Own Best Ally and Not Their Own Worst Enemy?
In a recent webinar on Corporate Governance, by Compass Investor Relations, the presenters touched upon the value of best practice corporate disclosure.
Compass Investor Relations partners Mark Collinson and Elaine Ketchmere, shared their thoughts:
There has always been real and fake news. Today, this news can be transmitted, duplicated, discussed, endorsed, refuted and recycled in an instant.
And so how do companies ensure that their securities prices reflect the true nature of the company’s performance and prospects?
Although not the whole answer, we would argue that following the “4Cs” – clarity, compliance, consistency and credibility, will turn the company’s Investor Relations activity and its disclosure practices into an important force in favor of true value and a protection against rumor and misinformation.
1. Communicate regularly. As OTC Markets Group states in their blog, Stock Promotion: Best Practices for Issuers, “timely disclosure of material information is fundamental to efficient trading markets.”
Information of all kinds flows into a vacuum. If you have not communicated about your business, then it is possible someone else will. Without timely information from you, what others might say about you will not be met with resistance. You may approve of this information or you may consider it “fake” or misleading, but once it is out there, you are on the back foot, reacting to something someone else has said, scrambling to occupy a communications space that you abdicated by your prior silence.
2. Be clear. Be aware that complexity is the enemy of clarity. For example, can you strip down the reasons to invest in your company to between four to seven key points? When three analysts read your latest press release, do they all cite the same key takeaways? Can an investor recall the key points from your latest investor call?
Anyone can retransmit your communications. They can quote you and cite your work. Any ambiguity can morph into misinformation at light speed and appear as though it was something you said!
3. Be consistent. Your corporate information needs to establish a strong presence and the proliferation of media outlets allows you to do this. However, wherever you say something, you need to be saying the same thing. Whether communicated in your SEC filings, press releases, corporate website or executive remarks made at conferences, on twitter, on Facebook or LinkedIn, your statements can be referenced, quoted, retweeted and hyperlinked. When one piece of your disclosure meets another, they should enhance, amplify and endorse each other, not cancel themselves out or create ambiguity.
4. Be credible. Investors are looking for the true value of a stock as much as you want to provide them with information in order to establish true value. However, they are busy and will be assailed by information and misinformation. They make judgments based upon the credibility of the source. They will look at the information that you provide but will also try to “triangulate” with other credible sources. Whenever you communicate, be aware that your own credibility is on the line. Make sure any due diligence by an investor backs up what you have said. In addition, make sure those third parties with credibility such as analysts, respected bloggers, journalists and key opinion leaders, have all the information from you that they need to endorse your company’s position when asked to do so. Finally, follow OTC Markets Group’s best practices and never associate yourself with promotional activity.
Use of the 4Cs will in time make you the most credible source of information about your company, enable you to rebut and chase out misinformation, manage your reputation with investors and put you ahead in the competition for investor attention and loyalty.
Compass Investor Relations
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Los Angeles, CA 90045