NYSE-TSE pact underscores need for global IR

By Dominic Jones

THIS shouldn’t be news to anyone in the investor relations field, but the globalization of investor relations keeps rolling on apace as stock exchanges continue to link up.

A key component of the cooperation agreement between the New York Stock Exchange and the Tokyo Stock Exchange announced yesterday is helping listed companies reach investors in each other’s markets.

Internationalize your IR communications.

The joint release says the two exchanges “will examine cooperation in the listing process to enable issuers who are listed on only one Exchange to have improved access to investors in the other.”

NYSE currently lists 19 companies from Japan, but many more trade on NASDAQ and over-the-counter.

Better for Japanese firms than U.S. ones

From an IR perspective, my immediate reaction is that the pact is more advantageous for Japanese companies than U.S. ones. Reason being that most U.S. companies are heavily focused on their own backyard and are not used to communicating with overseas investors, who often have a slightly different approach to evaluating companies.

Based on our website reviews of some of the biggest Japanese companies, investor relations in Japan has improved over the past year. In part this is because of a resurgence of interest from domestic retail investors, which has led companies there to take a look at their websites again.

From a global perspective, Japanese companies do a couple of things really well. Their guidance practices are the best in the world, and those who argue that guidance is dead haven’t looked at the experience in Japan.

Japanese companies also are generally ahead of their U.S. counterparts when it comes to environmental and social reporting. On their biggest weakness, corporate governance, some reforms are starting to work their way through the system, but at a much slower pace than many international investors would like.

There’s still much room for improvement, but from what I can tell Japanese companies are showing a lot of interest in reaching out to investors around the world.

U.S. companies distracted by compliance

I can’t say the same for most U.S. companies, however. There are some notable exceptions. General Electric is the epitome of the global corporation. See its translated webcast transcripts, for example.

But GE is a rare exception. Most U.S. firms seem content to not look beyond their borders.

The National Investor Relations Institute (NIRI) routinely offers seminars for international companies on how to do IR in the U.S., but hardly ever on how U.S. issuers can target international investors. The NIRI newsletter, IR Update, lists just one article on international investor relations over the past 12 months — IR Down Under in the December 2006 issue.

I know! I know! U.S. IR departments have had a lot of other things to worry about. SOX, executive comp and that options thing, but I’m just pointing out that while American companies have been buried in compliance, companies elsewhere have been honing their communication skills to get their share of all those dollars going abroad.

There are many simple things companies anywhere in the world can do to make themselves more appealing to overseas investors. And all of them start with making better use of their websites, the most accessible and lowest-cost way to communicate with investors no matter what time-zone they’re in.

Related posts:

1. Evaluating NIRI’s Do’s and Don’ts for IR websites
2. Who to visit at NIRI’s vendor showcase
3. History made in Japan
4. IROs more short-term focused than analysts — Updated
5. US IRO pay figures released

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