Communicating with Financial Audiences

Abstract

The relationship a company enjoys with its bankers and shareholders is of fundamental importance. Their views of management, strategy and performance will help determine the company’s ability to borrow money, its potential to acquire others and resist being bought and its share price. It seems therefore only rational that companies should attempt to influence the way they are seen. by keeping shareholders informed of their performance and direction. This applies equally to well known and lesser known companies. Research supports the idea that active and regular communication can deliver real benefits to a company’s value. Charles Fombrun in his book, Reputation, notes that some analysts believe that the stock price ‘of many diversified companies would probably be at least 20% higher if those companies helped investors make better sense out of the diversity in their portfolios’.¹ Similarly work by Higgins and Diffenbach shows that security analysts see a correlation between how effectively a company communicates its strategy with the valuation of a company’s stock.²