By Dominic Jones
COMPANYNEWS, a Paris-based newswire and IR services firm owned by the Euronext stock exchange, has published findings from their third study of European company investor relations websites.
The study looked at 261 websites of companies in nine leading European indexes and evaluated each for their compliance with a list of criteria. While the study found a big difference in the standards between different countries — Germany was the best while Portugal fared worst — it said overall standards in Europe had improved over the prior year.
That’s a fair conclusion based on our own research. However, it’s only a modest improvement and there are many companies that lag far behind.
With 38 criteria, the Companynews study isn’t a particularly detailed one. However, it is consistent with prior surveys and so it provides a useful barometer of current IR website standards among Europe’s biggest companies. I hope they continue to produce this survey for years to come.
Key improvements over the prior year include a 36% increase in the number of companies that webcast their shareholder meetings and a 12% increase in companies that provide a corporate governance section. The study also reports a 15% increase in companies that webcast analyst meetings and a 22% increase in companies that provide their annual reports in “interactive format.”
To me these trends reflect a shift from the tail-end of the corporate governance regulations working their way through the system, and companies beginning to respond to rising shareholder activism, as evidenced by greater attention to the annual reporting process.
The study also reports some significant changes that in our view are not necessarily improvements, but may actually represent a deterioration in standards. For example, the study says there as been a 73% rise in companies that provide a contact form for investor relations. This is not good news because contact forms make companies seem disinterested. Much better to provide personal contact information.
Another practice that the study highlights as being more common is providing stock trading information in a download, like a spreadsheet. Fully 66% more companies are doing this. I’ve been following this business closely for almost a decade and I have never seen any credible evidence that stock trading data in Excel is something investors demand from IR sites.
Certainly, if you’ve done everything you possibly can to improve your IR website and can’t think of anything else to do, then add stock data in Excel. Otherwise, look for something better to do with your money.
Linda Sadgui at Companynews was kind enough to send me a full report on the study. Here’s a long list of the headline findings from the study with scattered comments from me in brackets. Feel free to use the comment form below to add your own thoughts:
Stock Information
- 95% of companies list their stock price on their sites
- 88% provide a stock chart
- 65% place a stock price or graph on their homepage (Stock quotes and charts are almost never the reason for visits to a company’s website so it doesn’t warrant being on the homepage for this reason. Nothing wrong with doing it, but I wouldn’t reward companies for it.)
- 69% enable comparison of their market price to their benchmark index (Depends on how you define “benchmark.” The high figure here indicates they’ve used a broad definition and don’t distinguish between market and industry indexes.)
- 25% enable stock performance comparisons to their competitors. (Hmm, only a quarter of companies are transparent. That’s right.)
- 53% permit downloading of their market-price history.
- 35% provide a technical analysis tool for their market price. (In most cases investors don’t need this from an IR site. They have better places to go.)
- 9% have a market-price graphic linked to the news. (This is relevant, as I wrote recently about Google Finance’s stock charts)
- 79% post their dividend
- 34% offer a return calculator
News & Events
- 100% post their press releases online
- 91% provide an archive of press releases dating back at least 3 years
- 65% offer e-mail delivery of company press releases. (Note, it is 100% in Switzerland where this is a regulatory requirement. It’s a good rule and should be adopted by regulators everywhere.)
- 93% post information on their Internet site after analysts’ meetings. (While almost all companies provide at least a few presentations on their sites, standards vary greatly. This is an area that most companies could improve.)
- 65% post the webcast of their analysts’ meetings
- 99% publish their up-to-date financial calendar (This isn’t right. They may have a calendar but I can guarantee you that far fewer are up to date, although it does depend how you define “up-to-date”)
- 30% make it possible to receive e-mail alerts about their financial events. (This refers to facilities that alert investors via email to upcoming events. This should also be a regulatory requirement and part of a regime that allows companies to satisfy scheduled disclosures on their websites, as I’ve explained here.)
Corporate Governance
- 96% include a section on corporate governance
- 92% list the members of their Board of Directors and their Executive Officers
- 75% publish management biographies (Yeah, but how many are good?)
- 26% disclose insider transactions (Regulators could help out here with a central European insider database.)
- 24% detail management compensation (I think this means they could find the information without rummaging.)
- 87% disclose information after shareholders’ meetings
- 30% rebroadcast their shareholders’ meetings online. (Sad, isn’t it?)
Annual Reports
- 100% provide their most recent annual report
- 88% provide annual reports dating back at least 3 years
- 55% offer their annual report in html/flash format. (This likely includes image-based reports and summary reports, not companies that post their full reports in HTML. Flash is rarely if ever used properly for annual reports.)
- 51% give the option of ordering hard copy of their annual report. (If someone is prepared to wait for your report in the mail, they’re probably really, really interested. So give them the option.)
Contacts and services
- 96% include a Contact Investor Relations section
- 87% give a direct number for the Investor Relations department
- 67% list a contact for the company’s Investor Relations department (European IR departments are more accessible than their peers in other regions. The exception is in the UK where they’re truly snooty.)
- 48% have a contact form for their Investor Relations department (Please don’t do this.)
- 54% provide a specific Investor Relations F.A.Q. (Don’t listen to people who say a good site doesn’t need an FAQ. It does if the site is really, really good, but just having FAQs doesn’t make it so.)
Analyst coverage
- 56% have a section on analysts’ coverage of their stock (This counts estimates, recommendations and target prices or any combination of them, I assume.)
- 47% publish a list of analysts covering their stock
- 5% give access to studies carried out on them by analysts (While retail and other investors benefit hugely from this practice, companies argue it isn’t feasible due to liability issues.)
The survey is useful as a benchmarking tool for overall changes in practices over time. However, it isn’t detailed enough to identify the best of the best sites, even though Companynews has also used it for that purpose, though more as an afterthought than a priority. They arrived at Repsol YPF as the best site in the survey. The Spanish oil company was our third-ranked site in the global energy sector in February.
What is interesting is the comparison of standards in different countries. This gels with our own findings to a great extent, where German companies are leaders by a good margin, followed by UK companies. According to Companynews, Portuguese companies have the weakest sites. These are generalizations, of course, because there are good and bad IR sites in almost every country. Portugal Telecom, for example, is one of our top-ranked Telecommunications companies.
When looking at surveys like this, it does help to understand the context and I hope you’ve found this useful. Obviously, I might be conflicted in that my firm conducts similar research, but I’ve tried to be objective and constructive. If you think I’ve been unfair, feel free to state your case in the comments below.
[...] It all makes them look rather greedy, especially when you consider that European IR seemed to be getting on quite well without them before the TOD came along. [...]