INVESTOR RELATIONS

What is public relations? Students define public relations. Part 2.

2011-10-13T07:30:00.000-04:00

Here is the second group of students from Principles and Theories of Public Relations class answering the question of what public relations is. Here is their definition of public relations.

Can you say: PEE! ARR! Say: PEE! ARR!

What is public relations? Students define public relations. Part 1.

2011-10-12T13:54:00.000-04:00

Students in my Principles and Theories of Public Relationsclass were asked to create a user-friendly explanation of what public relationsis. This explanation was to be aimed at a person who has no clue about publicrelations rather than at an expert or a public relations scholar.

This is what the first group came up with:

Investor relations for multi-industry conglomerates

2011-09-25T13:38:00.000-04:00

I really enjoyed the article, Straddling Market Sectors, byKate Sidorovich, IRO at eHealth, in the September’s issue of IR Update. When company operates in several different businesses, thetypical analyst’s approach of finding comparable companies becomes useless or at least very challenging –Sidorovich talks about her company that is in healthcare and e-commerce. So,some analysts end up comparing them to financial institutions, some toinsurance companies, and some to technology companies.

My experience of working for a multinational conglomeratewas very similar. We produced submarines, tankers, nuclear reactors, off-shore andon-shore drilling rigs, excavators, motorcycles, variety of steels and othermetals, and provided banking services, insurance services, real estate, and soon. Now try to find a comp for that!

And it is impossible to use one conglomerate as a comp foranother – the combination of market segments they are in will also be verydifferent!

So, I had analysts from almost any imaginable sector of theeconomy (plus, the emerging markets!) following us and talking to us – each withtheir own set of comps based on their industry. That was always a lot of fun toconduct conference calls or other investor meetings.

IR Update’s article concludes with one of therecommendations to “embrace education.” And I 100% agree. It was my job as anInvestor Relations Officer to educate our investors and analysts on all ourindustries, products, market positions, and so on to help see the big pictureof where the company is going rather than just one of our businesses.

Can Regulations Help Investor Relations Officers Learn Why Shareholders Buy The Stock?

2011-09-07T22:32:00.000-04:00

I finally got to reading the August’s issue of IR Update, a publication of the National Investor Relations Institute. The first article of the issue, Institutional Ownership: No More Secrets, makes a good claim that it is vitally important for companies to know who their shareholders are. Even more, it is also important for companies to know why the shareholders buy that particular stock.

When I worked in investor relations, I devoted significant efforts into the shareholder research. It was even more difficult in my case since much of the stock was in the American Depositary Receipts or Global Depositary Receipts. I would only see Bank of New York, ING Bank or Euroclear as the recorded owners of shares, when in fact they were just holding them for the owners of depositary receipts. I had to go through many layers of nominal shareholders before I could get to the actual beneficial owners.

What I find naïve, however, is the solution that the IR Update’s article seems to propose: change in regulations, namely 13F, 13d, and 13g filings. The only thing this change can accomplish is providing faster information on who owns the stock, but no legislation can help IROs learn why these shareholders buy, sell or hold on to the stock. Learning the answer to that why question would always be on the IROs themselves and their ability to develop good relationships with shareholders as well as sell side.

This is why I believe investor relations is a professional occupation – it requires specific skills and knowledge set in finance, communications and law. And this is also why I cannot stand when some companies put unqualified people to run their investor relations departments, from former financial analysts with no ability to communicate to former journalists with no understanding of business or finance. But they at least have a chance to learn on the job (especially with the help from great NIRI events). What I think is even worse is so-called “rotating” appointments, when a person get assigned to the investor relations duties for just a year or two. Even if a good solid professional relationship can be developed in a year, there is no guarantee it will transfer to the next “rotating” person. Having that rotation, in my mind, shows lack of respect from the company to its shareholders – I do not know of any company doing rotating assignments to their CEO, CFO, or COO positions!

How Investor Relations Contributes to the Corporate Bottom Line

2011-07-27T12:16:00.002-04:00

I just published another scholarly article focusing on investor relations: How Investor Relations Contributes to the Corporate Bottom Line. The article reviews academic and professional literature on investor relations contributions and claims that there are four major ways in which investor relations’s contribution can be evaluated:

1. Share price

2. Trading volume

3. Analyst coverage

4. Relationships with the financial community

Then, the study subjected these four theoretical contributions to the scrutiny by the investor relations professionals through the so-called Delphi panel methodology (a method initially developed by the U.S. military to evaluate dangers of the potential USSR attack!).

The results indicated that derived-from-the-literature contributions do not always meet the reality test and must be specified.

Share price largely depends on the performance rather than on investor relations efforts, however, investor relations can help that share price be “fair” – in other words, reflecting the actual value of the company rather than “the higher the better.”

High trading volume or lower trading volume can be equally bad for the company – so, it is more important to look at the efficiency of the market in a stock and broadness of the shareholder base.

Similar situation is with the analysts coverage – not just only good or only bad, but rather its accuracy and uniformity.

Finally, building relationship is a measure difficult to quantify, yet fully supported by the professionals. Investor relations officers, however, must look into costs and benefits of various relationships – hedge fund vs pension fund or private shareholder vs institutional investors.

The full article is published in the Journal of Public Relations Research, 2011, Volume 23, Issue 3, pp.302-324, and is available at the journal web site (although it might require subscription in some cases – then, contact me!)

What does it take to be an investor relations officer?

2011-05-24T22:16:00.003-04:00

I have recently received an email from a corporate treasurer in an Ukrainian company who asked me about a possibility of a career in investor relations. I think the answers might be interesting to other students and professionals who are considering a career in investor relations as well. So, I kept his original questions with my answers - I just removed the names. Of course, other IR professionals can correct my responses if their experiences were different from mine.

1) What value does financial education/experience in financial industry has for building career in IR?

Tremendous value. Without good understanding of finance it is impossible to be a successful IR practitioner. Also, much of your audience will be financial analysts and professional investors – so, it helps to be able to speak their language. However, in addition to finance, investor relations officers need a good understanding of the way company makes money: know key business processes, key technologies, key R&D strengths, key people, etc. This non-financial information is also very important for investors.

2) What professional experience will be of most value for pursuing career in IR?

People come to IR from various backgrounds – finance is probably the most common; communications/public relations is second, but there are also chemists, engineers, computer scientists, etc. I personally started as a financial analyst, then became mergers & acquisitions specialist, and that led me to IR.

3) What IR services could be provided to a public company by an independent IR consultant? What value can I create as an IR consultant? Is it possible to have an independent practice?

I am less qualified here – I have never been an independent consultant. However, my research shows that although most IR professionals at corporations come from the financial side, most of IR professionals at agencies are communication/public relations specialists. This can suggest that services IR consultancies often provide are related to the communication side of things. Often agencies also do research, perception studies, develop targeting lists for new investors, etc. Finally, I would guess some international IR functions can be outsourced to an agency/consultant. For example, back when I was an investor relations officer, I created ADR/GDR program for the company through the Bank of New York and then worked on listing these securities in Germany, U.K., and USA as well as doing roadshows all over the world to tell the company’s story. Perhaps, some companies might wish to outsource that.

4) What knowledge is of crucial importance for an independent IR consultant and where to obtain it?

I think the uniform advice is before you go independent, work for somebody else. Join an IR agency and try it there – then, you will know what you need and where to get it!

5) What is your opinion about the future demand for IR services in emerging markets like Ukraine?

I think it will be growing in the emerging markets – I do not know much about Ukraine but China, India, and Brazil will probably have many companies looking for an IPO. It is a great way to raise money but it is also a certain status symbol for a company. Just today, Yandex (Russian leading search engine) had an IPO on NASDAQ and did extremely well. It remains seen how it will keep up with all the regulatory demands now.

6) Is IR more about finance or PR?

My view is that IR is right in the middle between finance and PR – both skill sets are equally important for the practice.

End of the semester: Students report results of their campaigns

2011-05-11T13:31:00.002-04:00

In the Campaigns class, students have to conduct two campaigns: one for a client and one for themselves. The campaign for a client is a group project and is based on client's objectives. The personal campaign is an individual project that aims to create a professional online presence for students with the ultimate goal of securing a job offer upon graduation.

Here is one student reporting on the results of the group campaign project for a client:

Here is another student talking about what he learned in his personal campaign:

What is wrong with Citigroup investor relations or fish where the fish are.

2011-04-20T14:33:00.003-04:00

@IRWebReport discusses @Citi‘s usage of new media tools to communicate with investors. Unfortunately, investors are not rushing in to chat with @Citi. So, @Citi ends up using tools designed for conversation simply for information dissemination wasting valuable opportunities, money and time.

So, why investors do not talk to @Citi? Consumers seem to enjoy this opportunity. The answer is quite simple… if you know how to fish, of course. You do? Well, then, you know that you fish where the fish are. Are there plenty of consumers on Twitter and Facebook? Yes, there are. You can also add YouTube, iTunes podcasts, some social bookmarking, and voila – you have a social media presence for your consumers where you can engage in conversation with them… yes, conversation. In fact, they are already actively talking, complaining, praising, and so on. @Citi has everything going for them.

But do we have plenty of professional investors on Twitter and Facebook? Investors who look for a chance to talk with CEO or ask questions they could not ask during the last earnings call? The answer is no. In fact, if @Citi investor relations people would walk over to the financial analysts in the room next door they would probably discover that financial analysts are not allowed to go to social media sites during work hours! I know of quite a few investment organizations that do not allow their investment teams go to Twitter and Facebook during work hours. I am sure it will change eventually, but even then if professional investors have to ask an investor relations professional on Twitter, in my opinion, it means such IR person should be fired. One of the responsibilities of IR is to develop good close relationships with the analysts – making them comfortable to pick up a phone and call you rather than use Twitter.

Does it mean that @Citi is wasting money? Yes. But there are also retail investors. Washington and NIRI always want companies to focus more on retail folks, and, let’s be honest, IR professionals never have time for them. So, social media can be a perfect solution. But the content and the presentation for retail folks should be different than for professional investors. And, sorry to say that, return on investment with retail investors is negligible, if not negative. But should we worry about @Citi’s ROI? Certainly not. @Citi IR team can play with all these cool new social media gadgets as much as they want – if they lose money, they can always ask for more bailout from the American taxpayers!

The Community Age: The end of Information Age and the future of journalism.

2011-03-01T20:47:00.007-05:00

Does journalism have a future in the Community Age? I have no doubt about it. But this future will be very bleak. Journalists, real journalists, will be miserable, poor, useless and discarded.

It was great to be a journalist in the Information Age. But we are clearly living now in the Post-Information Age. Information, which used to be a hot product, is now a commodity. Everybody can have as much up-to-date information as any journalist.

A couple of months ago, there was a horrific terrorist attack in the Russian airport Domodedovo. I learned about it on Twitter. I saw YouTube videos of the attack itself and of the aftershock after the attack from people who were at the airport and videotaped it with their cellphones. I read information from victims, their relatives, and people who were actually at the airport at the time live using LiveJournal, VKontakte, Facebook, and Twitter as well as a few blogs.

But what made the end of the Information Age clear for me was the fact that when I got home in the evening and turned on the news, all the news channel showed the same YouTube videos I already saw and used all the quotes I already read. So, where is the journalism then?

That is why I think CNN is struggling. They try to be a news organization in a post-news world. People do not need journalists for news anymore. That is also why Fox News is bourgeoning – it is not news but propaganda – it does not tell the news it explains information from a certain standpoint. MSNBC went the same way. Propaganda may be a harsh word – call it news analytics (that may be too nice of a word), or cause marketing, or promotion, or persuasion. The point is: it is not what traditional journalism is about – delivering objective news.

Next time something horrible or great happens we will know about it from bystanders’ Twitter feeds and see it on YouTube courtesy of bystanders’ cell phones, long before we will learn about it from journalists. And even then, journalists will probably just repeat the same YouTube videos and use the same tweets as quotes. Yet, Fox News “journalists” will make one conclusions, while MSNBC “journalists” will come to polar conclusions based on this same event whatever it might be.

What is interesting, however, is to try to understand what will come next. After the Industrial Age, people spent a decade in the Post-Industrial Age before Information Age came around and propelled journalism to the new heights. Now I believe we are in the Post-Information Age. What will replace it? To me, it seems like it might be the Community Age (you can also call it Network Age or Relationship Age). Your personal community, professional community, geographical community and other communities will have as much of an effect on your quality of life and on your opportunities as possessions had in the Industrial Age or knowledge had in the Information Age.

You are not what you have or what you know, but who you know and who knows you... your community.

Students-experts

2011-02-06T18:25:00.003-05:00

New semester, new students... This time students of the capstone Campaigns class have a challenging assignment of becoming experts in some field of public relations, marketing, corporate communications, etc. and talk about this field online. However, they are not going to be graded based on how many posts they blog or how many tweets they send, but on the actual conversations they engage in with the online community.

I know at least one already picked investor relations!!!

Graduate research class. Blog posts.

2010-11-12T12:34:00.001-05:00

Post your links here.

Undergraduate research class. Week 11 blog posts.

2010-11-12T12:33:00.001-05:00

Post your links here.

Master of Arts in Investor Relations: The first major in investor relations

2010-11-09T15:32:00.002-05:00

I talked earlier that investor relations is a rare subject on college campuses – departments of finance often view it as a communication function, while departments of public relations or corporate communication view it as a financial function. Accounting professors rarely devote any significant attention to investor relations, while management professors give investor relations an occasional mention usually related to issues of ethics or corporate governance.

As a result, standalone courses in investor relations are almost non-existent in regular college programs. Investor relations is usually taught in professional certificate programs, occasionally in master’s level programs.
However, at a recent PRSA conference, I discovered that there is now a complete investor relations program. Yes, yes, not just a course, but investor relations major! It is not an undergraduate program, however. It is a Master of Arts in Investor Relations program, MAIR.

The location of this Master’s program also surprised me – I could expect something like that in the New York area with so many publicly traded companies located there. Maybe even in Washington, DC. But the program is actually offered at the University of San Francisco.

The MAIR program description emphasizes the interdisciplinary nature of investor relations: “The graduate program combines a strong foundation of financial, marketing and legal expertise with the sophisticated public relations skills required in client relationships.”

The program, however, is not part of a Business School or a Communication School. It looks like it is housed in the College of Arts and Science. Not sure what to make of it...

The list of classes students will need to take during one year to earn their Master’s in IR is very impressive and seems to cover all the necessary topics:
• Financial Accounting
• Financial Markets
• Investor Relations and the Investment Process
• Macroeconomics for Finance
• The Practice of Investor Relations
• Communications for Investor Relations
• Corporate Finance
• Corporate Governance and Investor Relations
• Writing for Investor Relations
• Equity Valuation
• Fixed Income Valuation
• Marketing Your Company
• Disclosure and the Regulatory Process
• Derivatives
• Alternative Investments
• Investor Relations Capstone
• Investor Relations Internship (optional)

The faculty list of the program is full of adjunct professors. In other words, the program uses professionals to teach most of the courses – this approach has its pluses and minuses, of courses, but in investor relations there is no other choice – there are literally a couple of professors who teach and conduct research in investor relations. There are only three full time professors listed on the program homepage – with their research interests seemingly focused on economics rather than investor relations.

Anyway, congratulations to the University of San Francisco! It is very exciting news and I wish you success with this program. In fact, I will be in San Francisco next week for the National Communication Association conference. If I have time, maybe I will stop by the USF campus to take a few pictures of the birthplace of the first Master’s program in investor relations.

Graduate research class. Week 10 blog posts.

2010-10-31T15:27:00.003-04:00

Post your links here.

Undergraduate research class. Week 10 blog posts.

2010-10-31T15:27:00.001-04:00

Post your links here.

Graduate research class. Week 9 blog posts.

2010-10-31T15:26:00.003-04:00

Post your links here.

Undergraduate research class. Week 9 blog posts.

2010-10-31T15:26:00.001-04:00

Post your links here.

Graduate research class. Week 8 blog posts.

2010-10-25T12:46:00.002-04:00

Post your links here.

Undergraduate research class. Week 8 blog posts.

2010-10-25T12:46:00.001-04:00

Post your links here.

Graduate research class. Week 7 blog posts.

2010-10-20T13:53:00.002-04:00

Post your link here.

Undergraduate research class. Week 7 blog posts.

2010-10-20T13:53:00.001-04:00

Post your link here.

Corporate Social Responsibility Issues in Investor Communications

2010-10-08T15:49:00.004-04:00

In the earlier post about my presentation at the Academy of Management conference in Montreal, Canada, I talked about the fact that the issue of corporate social responsibility occupies a very minor place in communications between investors and investor relations officers. In fact, IROs rate such information as the least important for investors and the least important for properly understanding the company’s business. But are they correct? Do investors and financial analysts really not care about CSR?

Ernst & Young tried to find an answer to this question by conducting a study called Measures That Matter. In the study Ernst & Young analyzed sell-side reports, conducted a survey of buy-side, and even performed an experiment with different financial scenarios. The result: corporate environmental and social policies were ranked number 37 out of total 39 categories by the investors and financial analysts labeling this category among the least important.

On one hand, it means that IROs do in fact know what investors want (or do not want in this case). On the other hand, it means nobody cares about corporate social responsibility despite all this noise about CSR in the media!

Now, I should mention that Ernst & Young study dates back to 1997. A lot changed since then: from new regulations to new environmental and social disasters. It would be quite interesting to do an update to the study and measure what is happening in the industry now. However, when I contacted CFA Institute to request permission to survey their members financial analysts, they declined; when I contacted Security Traders Association to request permission to survey their members representing buy-side, they also declined. I do not know how Ernst & Young did it!

One of the changes I would expect to find is the appearance of people at buy-side and sell-side who specifically target so-called green investments. Information about CSR may not still be important for your regular financial analyst (unless somebody is suing you for a CSR issue!), but the same sell-side firm might employ a financial analysts who specializes in CSR investments and that analyst might be writing a different report for different investment audiences about your company as well.

Graduate research class. Week 6 blog posts.

2010-10-08T15:49:00.001-04:00

Post your link here.

Undergraduate research class. Week 6 blog posts.

2010-10-08T15:48:00.000-04:00

Post your link here.

Graduate research class. Week 5 blog posts.

2010-10-06T15:41:00.002-04:00

Post your link here.

Undergraduate research class. Week 5 blog posts.

2010-10-06T15:41:00.001-04:00

Post your link here.

Graduate research class. Week 4 blog posts.

2010-09-27T13:42:00.001-04:00

This week we are talking about sampling.

Undergraduate research class. Week 4 blog posts.

2010-09-27T13:40:00.001-04:00

Students are now asked to read two blogs of their classmates and discuss what they read.

Graduate research class. Week 3 blog posts.

2010-09-19T14:43:00.001-04:00

Graduate students talk about the topics of their interest, from Disney to medical ethics.

Undergraduate research class. Week 3 blog posts.

2010-09-19T14:42:00.002-04:00

This time students will talk about research results and how they can be used, manipulated, or simply ignored.

Graduate research class. Week 2 blog posts.

2010-09-10T16:53:00.001-04:00

Post your links here.

Undergraduate research class. Week 2 blog posts.

2010-09-10T16:51:00.001-04:00

Post your links here.

Graduate research class

2010-08-31T16:43:00.001-04:00

Here are the links to the graduate students' blogs.

New semester - new students - new blogs...

2010-08-31T16:20:00.002-04:00

This semester I am teaching both undergraduate and graduate research classes. Students are once again required to choose some issue or communication specialization and focus their blog postings on such an issue/specialization.

The links to the undergraduate students' blogs will be posted in the comments here.

What do IROs communicate to investors?

2010-08-25T10:51:00.001-04:00

Recently I traveled to Montreal to attend a 2010 Academy of Management conference. What a spectacular event that was! But in addition to learning about the most recent advances in management research, I also presented my study on investor relations.

The study focused on the information that investor relations officers communicate to investors and financial analysts as well as what information IROs view as the most important for properly understanding and evaluating their companies. The study essentially grew out of research conducted by Baruch Lev who concluded that investors under-price securities because they do not understand and do not know how to properly evaluate non-financial and intangible aspects of businesses. Indeed, one often does not have set metrics or comparables to evaluate intangible assets. Lev also proposed that in our economy role of intangibles and non-financials is constantly growing, thus under-pricing may become worse and worse, and require immediate corrective action.
So, my initial question was who was to blame for that? Was it investors who do not know how to evaluate intangibles or was it investor relations officers who do not communicate such information? Indeed, if we believe that one of the main goals of investor relations officers is to help investors understand the company’s business and properly evaluate it, then should not investor relations officers walk investors through all the complexities of intangibles and non-financials?

So, I created a list of ten different categories of information about the company. I presented this list to the investor relations officers who agreed to participate in my study and asked them to evaluate the importance of each category and also the frequency with which they communicate each category. The categories were: financial disclosure, strategy, products and services, market share, organizational capital, quality of management, corporate communications, research and development, employees, and corporate social responsibility.
The end result: financial information dominates. No category of non-financial information was even remotely close to the importance assigned to the financial information and frequency of communication of financial information. That should not be a surprise as financial disclosure is the one dictated by laws and regulations. Thus, it is communicated often, fully and in regular intervals.

Among the different categories of non-financials, however, the leader was information about corporate strategy followed by the information about products and services. This makes sense. As a former IRO, I remember how often conversations with investors and analysts focused on the strategy of the company. Financial information tells you about the past performance, but strategy tells you about the future and this is what investors and analysts really want to understand – what is going to happen with the company next, rather than what happened with the company last quarter or last year. I can also understand products and services – any company loves to showcase what they actually produce. And, in the end, the actual product is essentially what the company exists for and what its financials depend on. I am surprised, however, that research and development was not among the leading categories or the quality of management. Both of these categories seem quite important for understanding corporate value and when I worked as an IRO I paid significant attention to both the management team of the company as well as its research and development efforts during our meetings with investors and analysts.

Now let’s mention the outsiders – information that ranked the lowest both in terms of frequency of communication and its importance. The study found two types of information ranked lower than any other categories: it was information about corporate social responsibility and information about employees and human resource policies. And that is after all that talk about how important CSR is and that employees are the main asset of corporate America… Interesting…

It is also quite interesting to compare these results with what information investors and financial analysts actually want and expect from investor relations professionals. Perhaps, IROs do not communicate information about CSR because investors do not need that information? But since this post got way too long already, I will talk about these comparisons in the next posting.

Video of "What does the Dodd-Frank bill mean for IROs"

2010-08-23T20:35:00.002-04:00

The video of the panel "What does the Dodd-Frank bill mean for IROs" I mentioned in the previous post was published in the Baruch College's Digital Media Library collection. It is worth watching:
Baruch College - Digital Media Library

Dodd-Frank bill and corruption in Russia

2010-08-13T11:36:00.003-04:00

On Wednesday the New York chapter of National Investor Relations Institute in partnership with the Robert Zicklin Center for Corporate Integrity at Baruch College organized a great event for investor relations professionals – a panel dedicated to the new Dodd-Frank bill. Since the bill is 2,300-plus page monster, the panel focused on just two key issues most relevant to the investor relations professionals: executive compensation, including say-on-pay, and proxy access. The panel will be posted online so there is no need to repeat what was being said but what is interesting and very much troublesome in my mind is the vague language of the regulation.

The panelists repeatedly said that the Dodd—Frank bill does not provide clear guidelines for any of these issues. In other words, it makes a promise but leaves the way to achieve this promise open for interpretation. Indeed, it allows executive branches of government such as SEC, CFPA and others decide how they want to govern the financial markets and define the actual measures necessary to achieve the legislative promise. The reason given for such ambiguity was the fact that financial markets are too complex and legislators do not know and do not understand all the nuances of these markets to identify ways to control them.

Although it might sound logical, the argument does not stand up to the scrutiny. First of all, running any aspect of a country is complex – education is no easier than financial markets. The same is true for defense or environmental protection. Second, legislators have a lot of professionals available to them through task-forces, consultancies and similar. After all, they can always invite professionals to testify and explain – they have time and resources to do it right and in a transparent manner. What is happening now is empowering the executive branch make decisions in their own interest without any transparency or debate (if they choose so).

Similar situation happened in Russia in early 1990s. When USSR collapsed, the new laws were written in a very vague manner – it was believed that the new democratic market system is too complex to be defined by rigid laws. In addition, it was believed that legislators who grew up in a socialist country were not qualified to legislate market economy – pretty similar arguments, aren’t they? As a result, the vague legislation empowered the executive branch to define the specific provisions of the law.

The end result – Russia today is one of the most corrupt countries in the world. The executive commissions are enabled to create the actual specifics of laws, define what they mean, and enforce them – an ideal environment for manipulation! Nothing can be accomplished in Russia without a bribe today – one has to pay every bureaucrat from tiny town halls to Kremlin.

Instead, would not it be better to stick to the actual separation of branches of government? Legislators should create the specific and actionable laws based on proper research and deliberations. Judicial branch should interpret these laws and help settle the arguments and ambiguities. Executive branch, in its turn, should be limited to just executing the laws – no more, no less!

A tough IPO

2010-04-16T16:14:00.003-04:00

We had an outstanding guest-speaker in my investor relations class today. Cheryl Schneider has over 25 years of experience in investor relations and she was a great guest to have.

She told us an interesting case study about a company she helped through an IPO. The company business model was so complex (it was a financial services company) that even financial analysts could not figure out the company’s business model and how it makes money. Now, try to sell a company like that!

But even more, the company was the first company in its industry to go public – thus, no comparables. We know about financial analysts love for comparables, but there is also an investor relations officer love for comparables – after all, we can target investors who own stock in similar companies and analysts who cover similar stocks. Well, that would not work in this situation! To make matters even worse, or I should say more challenging, the company’s founder did not have any past record of running companies, let alone publicly traded companies. Well, you cannot use the track record argument then, too.

This situation requires a great educational effort on behalf of the investor relations team. I tell my students that investor relations job is education – it is to educate investment community about the company and its business and it is also to educate the management about the investment community. Education is the main responsibility of the investor relations professionals, and not disclosure.

The case reminded me of my communications with former NIRI President, Lou Thompson. I have a tremendous respect for Lou Thompson - he contributed a lot to the profession of investor relations - but he once told me that investor relations is all about disclosure. And I had to disagree with him on that.

Disclosure is one of the tactics but it is not a goal of the profession or of the professionals, or at least it should not be. It is an important tactic, a legally required tactic in some instances, but it cannot be equated with the investor relations profession and everything that the investor relations professionals do. For one, it is not sufficient to put the information out there, more is needed to ensure your message is received, understood and acted upon. And second, focus on disclosure ignores the flow of information from investors to the management and, in my experience, it was always an extremely important part of the job.

So, once again, I want to thank our today’s guest speaker, Cheryl Schneider from Porter, LeVay, & Rose, for her great presentation and case study in my investor relations class.

Will it blend?

2010-04-07T11:40:00.002-04:00

Blendtec provides an excellent example of using online video, and specifically YouTube, to promote the company and its product.

Toyota is in trouble... What's next for the automaker?

2010-03-17T19:55:00.002-04:00

Quinnipiac University students share their opinions on the future of Toyota...

A question to ask...

2010-03-12T14:45:00.001-05:00

Next week in class we will talk about posting audio...

Here is an example:

Retail investors? No, thank you very much.

2010-02-08T11:09:00.004-05:00

Last week our class discussions focused on different publics investor relations officers communicate with. We talked about sell-side, buy-side and retail investors. We decided that investor relations officers should concentrate much of their efforts on the institutional buy-side. Yet, a recent article I found claims a different position.

An article on IR Alert blog gives 5 reasons why retail investors are an important audience for an IRO. Yet, the article misses a significant reason about why IROs are not actually focusing on retail investors as much as the article's author wants them to. Or, to be precise, the article misses all five of them.

Let's review.
1. The article claims that retail investors like to talk among themselves and with the management. Well, this is true, but this is exactly why they are a nightmare for an IRO. Would your CEO rather meet with 100 retail investors who together own 0.5% of your stock or with 1 fund manager who owns 3% of your stock? I think the answer is clear. And I am not even talking about managing and organizing the event.
2. The article interestingly enough claims that retails investors are smart. Some - maybe, but some are definitely not. And some - are not even close. I had a pleasure of dealing with retail investors when I worked as an IRO - most often, it was not fun.
3. The article claims retail investors purchase stock in small amounts and thus do not cause any change in stock price. Well, that's in my mind a reason to pay less attention to them rather than more.
4. The article claims that retail investors in comparison with fund managers are not measured by monthly or quarterly performance and thus they can hold your stock longer. Well, although retail investors are not formally measured against some metric, there are different retail investors as well as different institutional investors. Some trade stock on any smallest movement, while others can hold it for years. The issue, at least in my mind, is that sometimes the logic in retail investors' behavior is missing or at least hard to predict. I can understand what moves the pension fund with a known investment strategy, but what would case a retail investors to suddenly buy or sell my stock is more difficult to understand and thus predict. And since each one of them owns a tiny percentage of my stock, I typically would not have time to figure it out anyway.
5. I read the article a couple of times, but I cannot find the reason number 5 for paying attention to retail investors despite the fact that the title of the article claims that there are exactly five reasons.???

Overall, I am not saying that retail investors are not important, but I doubt they can be more important for an IRO than institutional investors. There is a chance they can smooth out volatility in the market, there is a chance they will hold your stock for long time, there is a chance they will ask smart and intelligent questions, but there are probably as many chances that their behavior will be quite the opposite. And then again, how much of your stock do they actually own?

QU Senior Seminar in Crisis Management

2010-02-07T10:44:00.005-05:00

Here are the links to Senior Seminar in Crisis Management students' blogs:

http://quinnipiac2010.blogspot.com/ - James
http://www.heatherbacci.blogspot.com/ - Heather
http://kitsonlaboutique.blogspot.com/ - MacKenzie
http://primarycare-hlhitchen31.blogspot.com/ - Holly
http://www.ashleyduncan88.blogspot.com/ - Ashley
http://julinnaforlvmh.blogspot.com/ - Juliana
http://cmcleish.blogspot.com/ - Courtney
http://tkaiser36.blogspot.com/ - Todd
http://mtvprr450.wordpress.com/ - Brittany
http://qusensembankblog.blogspot.com/ - Matt
http://quseniorseminarjlh.blogspot.com/ - Jennifer
http://www.daniel-f-blanchard.blogspot.com/ - Dan
http://quseniorsemjec.blogspot.com/ - Jillian
http://takeadoseofbm.blogspot.com/ - Johann
http://gibbsteamracing.blogspot.com/ - Christine
http://rebeccaseniorsem.blogspot.com/ - Rebecca
http://mostmagicalplace.blogspot.com/ - Natasha

Investor relations class on Twitter

2010-02-06T17:33:00.011-05:00

Check out investor relations students on Twitter (#irclass):

quinnipiac2010
mrgast12
jagreenlaw
NicolePaschal
mahakim1
LouisPaolillo
JRBrunelle
SBeyel_IR
Hannahjkoch
NickBartlett29
IR_Advertising
AlexsaErin
briantinsley1
dfgblanchard
IRandSEC
ABsOpinion
CrandonL
murph0722
mbaker18
LJV21

Following students' discussions on Twitter

2010-01-29T17:53:00.002-05:00

One of the venues students will be discussing issues facing the profession today is Twitter. Students in the introductory Investor Relations class will be using hashtag #irclass. Students in the Senior Seminar will be using hashtag #qusem.

Important issues in investor relations

2010-01-26T12:28:00.004-05:00

What are the most important issues in investor relations today? Well, I have my opinion about that, but since I now have 22 students learning about investor relations in my class at Quinnipiac University I decided to let them choose the most important issue for themselves.

As a result, each one of them, based on our class discussions and assigned readings, will pick an issue important to the investor relations profession and will try to learn as much as possible about such as issue. The issues students are considering range from StockTwits and IR on Facebook to ethical codes of investor relations officers. Students will launch their own blogs dedicated to these issues and share their insights on them at least weekly.

I will share links to students' blogs on investor relations issues next week.

Investor relations text-books. Review.

2009-10-27T08:00:00.002-04:00

I would like to thank everyone who sent me their recommendations of the investor relations text-books. I would like to provide a short overview of the ones I already looked at.

1. Marcus & Wallace. New dimensions in investor relations. Pretty decent books. Some chapters are quite good - the chapter 1 as an intro into IR can do the job. Chapter 3 - review of audiences involved in investor relations (analysts, portfolio managers, lawyers, etc.) - is based on a good idea but classification is somewhat confusing and descriptions of characters do not add any value. We need to know what their goal and how to deal with them. Other chapters I did not find very useful. Some of them are simply irrelevant at this point in time such as chapter 6 - computer in investor relations. But the old age of the book is clearly noticeable in many other chapters as well; after all, the book was published in 1997. The big drawback of the book - no discussion of measuring and evaluating effectiveness of the investor relations program - yet, this should be the cornerstone of any professional education.

2. Ryan & Jacobs Using investor relations to maximize equity valuation. I would not recommend this book because of the information presented and the language used. It starts quite nicely with a part describing various players relevant to investor relations from sell-side to the mass media. These are pretty decent chapters. After that the book reads as a sale-pitch to promote the authors' own investor relations agency. Out of 25 chapters in the book, only one talks about actually how to do investor relations - chapter 13 - Positioning IR to succeed. Following chapters are often repetitive to early chapters in the book - like in Chapter 24, Event Management, we return back to overview of capital markets players and talk about analysts, short-sellers, etc. and then talk about guidance (despite the fact that there is a separate chapter about guidance). I find the second part of the book very confusing and poorly structured. And again not a word about measurement and evaluation.

3. Rieves & Lefebvre Investor relations for the emerging company. Again, somewhat outdated book as it was published back in 2002. Yet, it seems to have a good structure. Part one defines investor relations, players on the market, and investing theories. However, the focus is on micro-cap; it is appropriate for the book about emerging company, but maybe not so much for a general IR course. Part 2 talks about disclosure. Part 3 discusses some random bits and pieces of the investor relations practices - conference calls, news releases, presentations, etc. I wish it talked more about overall strategy rather than specific examples. And I wish it would talk significantly more about measurement and evaluation - it has half a page where it simply lists financial metrics for measuring company's performance rather than investor relations effectiveness.

If I had to choose out of these three books, I would probably go with the last one - Investor relations for the emerging company. But maybe there is something else out there?..

What is the best investor relations text-book?

2009-10-23T11:23:00.003-04:00

As I am preparing to teach an undergraduate investor relations course in the Spring semester, I face the issue of selecting a text-book for the course.

The situation is also complicated by the fact that I am going to have half of the students from the public relations department and half from the finance department. Plus, I might have a few from management and accounting.

So, the more I look the more I believe that there is no text-book available to me. In fact, some of the faculty and practitioners who teach investor relations at Colleges and Universities (and there is just a couple of them!) say that no such text-book exist. However, before I settle for a collection of random academic and professional articles instead of a text-book, I would like to at least give a try to finding such a magic book.

So, if you know of a book that can provide a general overview of investor relations, please share this info with me.

Investor relations course in the Spring

2009-09-15T09:20:00.003-04:00

It looks like this Spring I will be teaching an undergraduate investor relations course. Due to the interdisciplinary nature of IR, the course will be listed in both business curricula and communication curricula.

It will be my second time teaching a course in investor relations, but still I feel pretty excited. After all, investor relations is what I do research about and where I acquired most of my professional experience.

Anyway, any recommendations about the course are welcome!

Also, consider guest-speaking to the class. We are in Hamden - almost half-way between New York and Boston, convenient location for travel by train or by car. It is a chance to give back to the profession and help shape future investor relations officers (they might be working side-by-side with you in one, two, three or ten years!).

Don't confuse investor relations with publicity!

2009-08-06T10:10:00.006-04:00

On a blog of one highly respected investor relations practitioner I was shocked to read the following:

"As an investor relations person, I’m not part of the negotiating process for corporate deals. Folks who do negotiate the deals earn the big bucks – but that’s OK. My job is to communicate a deal once it’s done."

My shock was even stronger as the person writing these words was a long time member of NIRI and a president of a successful investor relations agency.

However, I have to conclude he is not an investor relations officer. Maybe a publicist. Maybe a journalist-in-residence. But not an investor relations officer.

Because if he were an investor relations officer, he would be part of a negotiation process. Investor relations must be involved in making a deal, representing the company's investors and defending their interests before the deal is carried out rather than simply communicating about a deal "once it's done." Maybe in this case the officer will deserve earning "big bucks" as well...

Are investor relations officers management's advocates?

2009-06-07T12:39:00.004-04:00

I am back from my trip to Russia and trying to catch up with all the readings and emails I missed during three weeks without accessing the Internet (well, to be honest I did look and respond to some emails).

Anyway, I came across an interesting post at the Investor relations musings blog: What makes for great investor relations? There, John Palizza writes: "Some people like to think of investor relations as an advocacy position, similar to the way our trial system works." This phrase caught my attention because this is exactly what I was finding when I was conducting my research on the history of the investor relations profession. I identified three periods in the IR history, the second of which spanning from about 1970 to 2000, is exactly that: advocacy. IROs try to explain, defend and advance the management's point of view.

Summarizing my research results for the Institute for Public Relations I concluded that this second era of the history of investor relations was characterized by financial expertise heavily dominating investor relations: accountants and financial analysts often with no expertise in strategic communications were hired to perform an investor relations function.

However, I suggested that today we are already in the third period - synergy era. Now investor relations is not focused on advocacy, but rather on understanding: the goal of the investor relations function is the improved understanding of the company and its business model among investors and analysts. This investor relations does not try to achieve a "high" value of stock but tries to achieve a "fair" value of stock.

Here is the summary of my review of the investor relations history.

Another article published! This time about investor relations.

2009-05-07T10:34:00.001-04:00

I just reported having an article published in an academic peer-review journal, Journal of Communication Management, and now I got another peer-reviewed article published.

The article, A Descriptive Account of the Investor Relations Profession, is published in the Journal of Business Communication, the leading journal of the Association for Business Communication.

The article reports on the survey of investor relations officers from Fortune-500 companies. The study asked about their day-to-day investor relations activities and their perception of investor relations as a profession. Later I will share some key findings from the article, but the full text of the article is also available here: http://job.sagepub.com/cgi/content/abstract/46/2/208

Now I can enjoy my summer months and some international travel. First stop: Moscow, Russia.

Does Obama promote stakeholder capitalism?

2009-05-05T13:32:00.006-04:00

A post at Harvard Business Publishing argues that Obama recent actions seem to promote the concept of stakeholder capitalism, meaning that corporations are not responsible purely to their shareholders, but a variety of other stakeholders as well including employees, customers, communities, etc.

As an example, the post refers to the fact that employee unions at Chrysler are getting more value on the dollar than Chrysler's debt holders.

Setting aside a puzzling confusion of shareholders with debt holders, who get VERY different treatments in bankruptcy procedures, I seriously doubt any of these actions have anything to do with the promotion of a stakeholder capitalism. To me it seems more like cleaning the mess trying to hurt as few people as possible while trying to earn as many popularity points as possible.

An academic article published.

2009-04-27T18:39:00.003-04:00

When I was working on my dissertation, I was looking into the history of investor relations in the United States. Today some might be surprised, but investor relations actually started as a public relations function rather than a CFO responsibility. So, I was looking at the history of public relations and corporate communications as well.

Then, I looked at the history of academic research in investor relations (virtually, non-existent even today!). So, I also looked into the history of academic research in public relations and corporate communications.

I ended up writing a pretty good account (in my mind!) of theoretical development in the academic research in public relations. I prepared it as an academic article and sent it to the Journal of Communication Management, one of the leading international journals in the field of public relations and communication management. And after peer-review, it was accepted and published!

http://www.emeraldinsight.com/Insight/viewContentItem.do;jsessionid=7D12FA12EBEAE15AF752ECC465705C74?contentType=Article&contentId=1771037

I am quite happy with the outcome!

Should bloggers be allowed to talk to IROs?

2009-02-26T20:56:00.003-05:00

Dominic Jones provides an excellent discussion about the influence of bloggers on investor relations and the way that some investor relations officers seem to lack understanding how much influence blogs (especially financial blogs) have in stock purchase decisions.

Needless to say, that the influence of blogs is only going to increase as the work load of financial analysts increases leaving them less time to do research and try to understand the company and the industry. It is not a surprise then that these very analysts and professional investors use blogs to acquire information to substitute their own research.

So, what Dominic concludes is this: "The time has come for investor relations departments to open up their earnings calls to finance bloggers." What I conclude is as an educator I must teach my students to deal with bloggers in the controlled environment of the conference call as well as uncontrolled environment of blogs, discussion boards, and chat rooms. Investor relations education must prepare students to track issues in the blogosphere, and be able to measure and manage the discussion on relevant topics.

Read more here: http://www.irwebreport.com/daily/2009/02/25/investor-bloggers-influenc/

What's the value of disclosure?

2009-02-20T21:57:00.003-05:00

10%.

At least that's the answer based on one possible measure.

Peter Galuszka looks at firms going "dark" and thus stopping to provide financial information about themselves to the investment community and regulatory organizations. The stock value of these firms then goes down about 10%. Thus, the value disclosure contributes seems to be 10% of the stock price.

More information is here: http://blogs.bnet.com/ceo/?p=1658&tag=nl.e7 13

Apple's saga continues...

2009-01-23T14:27:00.003-05:00

When I prepared my paper for the Investor Relations section of the Institute for Public Relations' Essential Knowledge Project, I used Apple's CEO Steve Jobs as an example to show the importance of non-financial information in communications with investors.

Occasionally I hear comments from people who have CPA or CFA after their names: "Investor relations? It is a financial function. It has nothing to do with public relations, communication or marketing" or something like that...

Well, I am not saying finances are not important, but they are not everything. The story the company tells, the quality of the management team, the research-&-development potential are as or sometimes more valuable than financial statements. Such non-financial information can send a stock skyrocketing into the sky or plunge it down into the ground. And, unfortunately, people from financial departments tend to overlook such non-financial information...

In the case of Apple, it was the health of Steve Jobs that plunged the stock prices down in the fall of 2008. In early January 2009 Apple admitted that they were not completely truthful about Steve Job's health and John Palizza summarized the potential implications of this case for investor relations.

But it was not the end of the story. Today the article at BNet suggested that perhaps not being honest about Steve Job's health is a violation of Reg. FD by Apple!

I think it is a material event, there is no doubt about that. Information about Apple CEO's health caused significant price fluctuations already. So, did the company do something illegal? Will we see an SEC investigation now with even more reprecautions for the Apple's stock price? The author of the BNet article concludes: "In the case of Apple, I think an investigation is certainly warranted."

The role of financial press for investor relations

2009-01-12T10:43:00.005-05:00

A new academic study relevant to investor relations comes from the Booth School of Business, University of Chicago. A study by Eugene Soltes, a graduate student, highlights the important role of the financial press for the investor relations professionals. The results suggest that greater dissemination of news by the company lowers volatility and bid-ask spread for the company’s stock.

You can read more at the IR Magazine blog: http://www.thecrossbordergroup.com/pages/1913/Breaking+news.stm?article_id=13153

Well, it is not a surprise that markets are not really efficient - public information is not equally "public" for all market participants. No Reg. FD can change that. But the difference does not stop at the access to information. Investors also process information differently - they have different understanding of the firm, history of tradings, financial knowledge, expectations, etc.

Hence, the need for the investor relations officer to know how investors access the information and plus to know investors themselves! Good research-based investor relations program can make a difference!

IRO: voice, teacher, researcher, and firefighter

2009-01-03T20:16:00.005-05:00

Yesterday I read an article by Rick Kiernan, a former public relations person for 1996 Atlanta Olympic Games, where he described the roles public relations practitioners play in their organizations.

I think these roles can be as descriptive of investor relations officers' jobs as they are of public relations responsibilities. Investor relations officers (IROs) in fact provide a VOICE for their organizations - communicating their companies' visions to variety of external audiences.

IROs are also TEACHERS translating organization's and industry's jargon to financial analysts and shareholders. Based on my former investor relations job for a heavy machinery corporation, I know it might be quite a challenge explaining to financial analysts the differences between open-hearth furnance and electric arc furnance.

IROs are also RESEARCHERS (Kiernan calls this role surveyor). In fact, CEO and CFO might rely on IRO's knowledge of the financial markets and the company's shareholder base. IROs must ask questions and listen in addition to talking; they are expected to know what investors like and dislike about the company, why the buy, hold or sell company's shares, what's their outlook on the company and insudtry and so on. Getting this information must be a result of informal converstaion or ab actual research program. In any case, the value of investor relations to the organization may be enhanced by this knowledge.

Finally, FIREFIGHTERS. This one is easy to understand - when crisis comes, IROs should cover the investor and analyst audiences and help the company deal with the situation.

Investor relations wiki: Comments open

2008-12-09T22:10:00.004-05:00

The Institute for Public Relations' Essential Knowledge Project now has comments feature. Anybody can comment on the information published. This interactivity ideally allows professionals and academics to make sure the information is correct and up-to-date.

Here is the link to my part, investor relations. Go ahead, tell me what I did wrong or perhaps right. So, what are you waiting for?

Investor relations professional wiki

2008-11-15T11:21:00.003-05:00

Well, it's been a long time since I posted here, but I was not slacking off. I presented at a couple of conferences and now am getting ready to travel to San Diego for next week's NCA conference. But another thing I want to share with you is the Essential Knowledge Project organized by the Institute for Public Relations.

The goal of the project is to provide "a guide to existing public relations research and translates this knowledge into practitioners' language." As such, EKP provides summaries of research about crisis communications, fundraising, ethics, etc. One of the areas is investor relations.

I was honored to be selected to write the introduction to the investor relations page. However, no single person can be an authority on investor relations. So, I encourage you - academics, professionals, students - to contribute. I think of this project as a Wiki page where together we can summarize the knowledge for young practitioners and identify the missing pieces where research should be directed. Feel free to add the information that I missed, correct the mistakes that I made, ask the questions that I did not asnwer, and simply share your thoughts.

So, welcome to the Essential Knowledge Project: Investor Relations.

Shareholder Forums

2008-09-26T21:31:00.003-04:00

Internet keeps marching on into the domain of investor relations. Following emails, Web sites and even blogs, companies are now considering launching online forums, where shareholders, financial analysts and other interested parties can chat with the management and with each other about whatever they want to.

Or, to be more specific, whatever the management allows them to chat about. This is an important caveat because hosting its own forum gives the company a complete control over the content - including moderation and pre-moderation of every post and comment. Seems like a lot of extra work with a potential for disaster.... The question is: Is it worth it?

The answer of Mike O'Brien is: Definitely, yes. He is the leader behind eShareholder forum, a turn-key solution for such shareholder forums. I spent some time on the phone with him trying to figure out how it works and it seems like a well-designed product.

However, I have hard times trying to imagine an analyst from Calpers going to the forum to have his questions answered. Would not they pick up the phone? Unless the situation in investor relations changed a lot since I returned back to academia, I, as an investor relations officer, knew all the analysts covering my company (and covering my industry) and they knew me. The same was true for the large investors. We communicated quite often via phone and email and I would not see much value in shareholder forum back then.

Now, the situation might be quite different for a company that has a large private retail shareholder base. Do we still have companies like that? I do not know. Statistics tell me that the U.S. market is highly institutionalized, but who knows what we will have at the end of this current financial crisis. We might return to the golden times of 1950s when retail ruled the market and financial intermediaries hardly existed. We might, but I doubt that.

Another user of eShareholder forum might be a start-up with no analyst coverage or the one just trying to lure in some big investors. Again, I am not sure if that would be the best strategy to use, but maybe one of the strategies.

Here is the article that thinks shareholder forums can provide "an innovative and cutting-edge way of distinguishing itself from its peers and competitors." Again, I am not sure how much value investors and analysts will add for this "cutting-edge" unless it has different information (unlikely) or provides it faster than a phone call (unlikely). Can the interaction between investors themselves on the forum create additional value for the company? Once again, I am not sure.

So, in conclusion, I think eShareholder forum is a great forum product. It is well-designed and includes all the neccessary controls and components. But how much companies today need any kind of shareholder forums I do not know...

The Dark Side of the Internet

2008-09-11T00:55:00.001-04:00

What can make your company stock crash from $12.50 to $3 a share within 15 minutes? The answer: An article in a local newspaper... from 6 years ago.

Wall Street Journal reports a truly amazing story (http://online.wsj.com/article/SB122100794359017593.html) that reads almost like a science-fiction. Here is a possible chain of events:
- Hurricane is near Florida
- People search online for plane delays in Florida
- In search results they stumble upon a six-year-old article about bankruptcy of United Airlines published in Florida's Sun-Sentinel newspaper
- Since it is Saturday night, not many people are on the site of the newspaper, so even a few hits make that old story move up into the list of popular stories
- Google's crawler, that checks popular stories every 15 minutes or so, notices the change and picks up the old story
- Being old the story does not have proper tags that would identify it as a 2002 story
- Monday morning, a financial research firm notices the story on Google and assumes it is current
- The story is supplied to Bloomberg
- Wall Street traders see the story and... stock plunges down within 15 minutes!

Wow! I just wonder what other old story will make it big on the stock market...

And what can IRO do? Should we search for our company name in variety of word combinations? Maybe not even stopping on the first page of search results, but looking through the first ten pages or so?

Blogging - a new addition to the investor relations syllabus

2008-08-02T22:37:00.004-04:00

Much discussion has happened in the blogosphere (see IR Cafe's SEC clarifies guidelines for IR on the Web or IR Web Report's SEC OKs websites and blogs for Reg. FD) as well as in other media recently regarding SEC's new guidance on using corporate Web sites. In short, disclosure nowadays does not necessarily have to equate with a press release. Investor relations professionals now join public relations practitioners, fundraisers, and political campaigners, who have utilized Web sites, as well as blogs, discussion forums, bulletin boards, RSS feeds, and even Facebook, for quite some time already.

Investor relations is just making a small step so far, but today's students who enter the industry four years from today should prepare for how this step will change the industry 5, 10 or 25 years into the future. No doubt, investor relations sections of the corporate Web sites will be used more heavily. More corporate blogs might also appear (perhaps similar to Dell's investor relations blog).

All in all, I would do a disservice to my students if I do not add a certain component to the course covering writing for the Web sites, evaluating Web sites' usage, managing blogs, and monitoring and particapiting in discussion forums or conference boards.

XBRL: yes or no?

2008-07-25T11:41:00.003-04:00

For several years already, the idea of XBRL worried me. I was not quite sure what it was until I was reading an article about the history of accounting standards. The accounting development was based on providing greater standardization - so that people could compare different companies between each other.

Does not it sound similar to XBRL - apply tags and everybody understands what's going on?

Anyway, now all the accounting is in footnotes, and I can understand that because intangible value, for example, cannot be well represented through the means of GAAP.

Now to XBRL..... if we have all perfect standardized tags, we lose company's value because I do not think we can explain all companies with standard tools. Add footnotes to XBRL (SEC was talking about allowing text fields in there) and we lose the value behind the idea of XBRL - having easy-to-understand standardized descriptions of companies.

Anyway, this calls for more thinking (there is a reason it is not a required procedure yet)!

Oil market is free market... Is this a joke?

2008-07-22T11:40:00.000-04:00

I was reading a discussion on Jeff Matthews' blog about the campaign organized by the airlines to fight the outrageous oil prices: StopOilSpeculationNow. The bottom-line of the discussion seemed to be that free market sets the price and airlines should've played the derivatives markets better to hedge themselves.
Now, there is some sense in this idea except for one thing that really bothers me. How can anybody be so naive to call the oil derivatives market a "free" market??? I am not even going to discuss the derivatives part of it with its rules and regulations, but the oil part...
Free oil market? Seriously?The oil market depends so much more on the political players rather than on economic ones that calling it a free market in its traditional meaning seems like a cruel joke.
I have little doubt that if Gore won the elections in 2000, now we would be discussing if the oil prices could go as high as $10 per barrel instead of discussing if they can get to $200 per barrel...

Middle East goes for IR...

2008-07-15T18:00:00.000-04:00

I was happy to see the news in early July that Middle East Investor Relations Society was established. So far the Web site is empty - there is nothing there except for the welcome message and the mission statement of ME-IRS.

I talked with a few IR practitioners from the region and it puzzles me that most of them draw support from Britain's Investor Relations Society rather than from the U.S.'s National Investor Relations Institute. They go to IR Society's events, receive IR Society's certificate, and look to IR Society for help when needed. I wonder why is that? Is it simply because Britain is closer than the United States? Is it because they want to list their companies on LSE or Deutsche Borse? Or is it because IR Society is better in its international outreach programs than NIRI?

In any case, best of luck to ME-IRS! Investor relations is still a very young profession even in the United States and Great Britain; internationally, it's just in its earliest stages.

Investor Relations on the Web: Blogs (Part II)

2008-07-06T20:57:00.003-04:00

I would like to thank Dominic Jones of IR Web Report and Rob Berick of Dix & Eaton for sharing with me some additional links to investor relations blogs I missed before. I have reviewed these links and I would like to add a few of these blogs to my list.

Crossborder Blog. A blog from publishers of IR Magazine. In fact, they publish three magazines (the other two being CorpComms and Corporate Secretary) and so the blog is divided into three categories to cover topics from all three magazines. However, all three areas are quite interconnected, so I would encourage reading the whole thing. The blog, unfortunately, is not updated regularly; it is also still in its first year.

JeffMatthewsIsNotMakingThisUp.This is not strictly an investor relations blog as it focuses on everything related to Wall Street. However, the blog discusses investor relations issues quite often and it is always a pleasure to read. The blog is written very professionaly (but with a tendency to have somewhat longer posts) and is updated at least two-three times a week. In addition, the blog has quite a few readers - it probably has the most comments among all the blogs discussed.

Risk and Governance Blog. A blog is managed by Risk Metrics Group, a company specializng in various aspects of corporate risk management. The blog mainly discusses issues of corporate governance and is updated once or twice a week. In addition, this blog has links to other corporate governance blogs from around the world.

Anil Dilawri Blog. A blog from Hill & Knowlton investor relations group's director Anil Dilawri. The blog is not updated very often, about twice a month. Yet, it looks very professional and provides a valuable point of view on investor relations from an executive of a large public relations agency.

Investor Relations on the Web: Blogs

2008-07-04T12:03:00.006-04:00

Since I am teaching investor relations, I would like to compile a list of resources about investor relations available on the Internet. Let's be honest, students are more likely to read something on the Web rather than go to the library.

I will start with blogs. I will try to create a list of blogs focused on the investor relations profession. I would really appreciate any help from the professionals and academics - if I miss a blog, please feel free to point it out to me. No single person can be a final authority on investor relations (or anything else for that matter!); my five years of professional work in investor relations and another five years doing academic research in investor relations, perhaps, qualify me to teach investor relations to students, but they do not make me all-knowledgeable about the profession.

Investor Relations Musings. A blog written by John Palizza, a practitioner and educator in investor relations, who now runs his own consulting company. A blog is updated about once in two weeks. The blog has a general focus on various aspects of investor relations. Texts are written in "plain English" and are highly readable.

IR Web Report. A blog managed by an investor relations consulting company. The focus of the blog (and the company) is online investor relations and online corporate communications. The blog is updated almost daily, written very well and has a lot of useful information.

Neville Hobson. A personal blog by Neville Hobson, a public relations and corporate comunications practitioner from Great Britain. He is a pioneer in using new technology, so the blog pays much attention to the online communications and virtual reality. The main focus is various aspects of communications, not just investor relations. The blog has a very busy design, however, tags can help readers find the information they are looking for. A blog is updated daily (or several times a day!). Easy-to-read, great source of information about European investor relations.

Dix & Eaton Corporate Blog. A corporate blog by an independent communication consulting company Dix & Eaton. The blog has a general focus on various investor relations issues. It is not updated very regularly, but there is a post at least once a month. However, the posts are usually valuable and provide good summary and analysis rather than just a link to information.

TheCorporateCounsel.net Blog. Now this is the destination to discuss everything related to legal aspects of investor relations. The main focus is legal environment of corporate governance, corporate communications and securities regulations. The texts are, perhaps, not as user-friendly as some other blogs, but subject matter is probably to blame for that. The blog is part of The Corporate Counsel web site, a provider of educational and consulting services. The blog is updated daily.

CR Blog. A blog by David Philips, a partner at PricewaterhouseCoopers. The blog focuses on corporate reporting and originates in the United Kingdom. The blog is not updated very often, once or twice a month, but I do not know any other blog where we could learn what one of the top-auditors think about corporate reporting.

DellShares. This is NOT a blog about investor relations. This a blog by Dell and about Dell. However, it is an example of how investor relations professionals can use blogosphere to communicate with investors and other financial audiences. The blog is run by Dell's investor relations team under the supervision of Dell's VP of investor relations Lynn Tyson, perhaps one of the best investor relations professionals. The blog is updated about once a week.

MindShare Blog. This is the official blog of the National Investor Relations Institute. Access to this blog is restricted: only members of NIRI can post or even view the blog, thus making it useless for my students, who are typically not members of NIRI.

IR practices: Data summary

2008-06-06T12:41:00.003-04:00

In the spirit of academic transparency, I would like to post a summary of data from my dissertation. I shared this information with my survey participants previously and now I would like to make it available to everybody.

My dissertation surveyed investor relations officers in order to develop theory in the investor relations research. Now, for theory-development part I would have to refer you to my actual dissertation, but I would be happy to share here the actual data summary:

Click here for PDF.

The blog lives on!

2008-06-05T18:15:00.005-04:00

I defended my dissertation.

So, this blog changes its administrator - Alexander Laskin is leaving. Everybody, please welcome Dr. Alexander Laskin :)

Anyway, I decided to keep this blog. Although initially it was intended just for the class I was teaching, I think I might have something to say about investor relations, investor relations education and investor relations research, as a new Assistant Professor, specializing in investor relations. Especially since now I would have to earn tenure and that means... oh, yes, more research projects!

I think I deserve the summer off, but in the fall my goal is to post at least weekly. Let's see how it will play out :)

Putin as a New York Times columnist...

2008-01-02T20:27:00.002-05:00

Putin will be writing a weekly op-ed for The New York Times!!! It is amazing. Russian President agreed to do some western-bound public relations.

There is no doubt he himself won't actually write any of these articles - I seriously doubt he will even read them. But I am surprised the PR agency that works for the Kremlin now (anybody knows what agency that might be? :) ) managed to persuade the Kremlin to let them do it.

I especially like the way NYT explains why they have chosen Putin:

QUOTE. Look, Hitler and Stalin are dead. Pol Pot, too. Osama bin Laden tends toward the run-on sentence. Sudanese President Omar al-Bashir has trouble meeting deadlines. Musharraf told us he has too much on his plate right now to commit. Charles Manson's parole board has repeatedly declined our requests for Chuck to pen a column for us while serving out his life sentence. Dick Cheney can't write a sentence without dropping an F-bomb. And, well, let's just say all options were off the table concerning President Bush. END QUOTE.

I got the story from Accountbility Central. I could not find anything on the NYT Web site about it, however....

Students' blogs: Update

2007-10-02T17:01:00.004-04:00

Second week of blog postings (Due Tuesday, October 9).

Students' blogs

2007-10-02T09:19:00.003-04:00

Students in Public Relations Writing class prepare blogs for the company/product/issue they are interested in. Here are their blogs...

The last year

2007-08-24T12:34:00.001-04:00

Yesterday I started my final year of the Ph.D. program at UF.......

Back from AEJMC

2007-08-16T12:08:00.000-04:00

It is good to be back home. AEJMC was crazy - interviews with schools all day from early in the morning to late in the evening. Always smile, be nice, don't say anything stupid :) I did not even have a chance to attend any sessions, except for the ones I was presenting in, and did not have a chance to see the city.

Oh, well... Maybe when I go to DC for the Association of Business Communication conference in October I will have a chance to do any of the fun stuff... :)

NIRI 2007 Conference

2007-06-20T12:00:00.001-04:00

Between my written quals and oral defense I attended National Investor Relations Institute’s Annual Conference. The event was great! And what I liked the most was the shift in perceptions that I think is occurring in the investor relations profession. It seems to me that more and more value in IR is being placed on communications and relationship-building. Just a few years ago many IR professionals were accountants whose job was to disclose financial statements – communications skills were not important and proactive investor relations management was almost non-existent (unless the company was planning an IPO!).

I recall, however, that IR was already once dominated by communication and public relations people (in 1950s and 1960s) who managed to disappoint their financial customers by lacking any understanding of finance. So, this time, while increasing the importance of communication aspect of IR, we should not forget about numbers. After all as Morrill said, IR requires both skill sets!

I am a Ph.D. Candidate

2007-06-19T20:30:00.000-04:00

Almost done...

Well, I passed my qualifying exams! And even better, I defended my dissertation proposal - the first three chapters. So, the only thing left is to actually do the study and write up the results.

It feels good!

:)

NIRI Changes the President

2007-03-26T23:05:00.001-04:00

Well, while I was on springbreak, NIRI (National Investor Relations Institute) announced that its President, Nancy Humphries, resigned. Interesting fact was that she had been the President for only 6 months before her resignation...

Strange, huh?

And here is the offcial news.

What happens with those who want to study intangibles?

2007-02-15T17:36:00.001-05:00

Well, so I decided to write my dissertation about non-financial indicators of performance and intangibles, and how they are communicated to investors. First, I decided to see what is on the Web. Found quite a few sites. But.... many of these sites are dead.

This one, for example, was fathered by Ernest & Young. Nice name: E&Y Center for Business Innovations. Description in Google promises a lot, but then I clicked on it...
http://www.businessinnovation.ey.com
... and nothing.
I found another address for it that did respond...
http://www.progressivepractices.com/prototype1/cgieytop.htm
...but there was almost nothing there except the title.

Another one sounded even better: Sustainable Investment Research International Group...
http://www.siricompany.com
... and again no links are working...
I was however lucky to find the European site of this organization working...
http://www.csreurope.org
... but not much information there.

I will continue my search.

Research project completed!

2007-02-09T22:57:00.001-05:00

The project that I worked at for awhile, measuring the investor relations' contribution to the organizational bottom line, is complete. It is a qualitative study so no quantifiable measures were created (would not we all like to have objective numbers!). But at least professionals had a chance to discuss scholarly ideas on the value of IR and seemed to, in general, agree with them. This is a good sign. I think...

Here is the link: http://www.instituteforpr.org/index.php/ipr/research_single/value_of_investor_relations

Investor Relations

2007-02-02T18:03:00.007-05:00

Well, here is a place for investor relations practitioners and scholars to discuss all the issues related to our profession.

That is, if any of us will ever find time for it...