WHY don’t more companies provide transcripts of their earnings conference calls and investor presentations on their websites?
Of the 525 large-cap companies whose websites we review, only 12% are currently providing transcripts of their earnings calls on their investor relations websites.
It’s NOT because investors don’t want them.
There wouldn’t be a transcript industry if there wasn’t demand from investors. In fact, the entire conference call transcript industry owes its existence to a survey by the CFA Institute more than six years ago showing high demand for them among analysts, advisers and portfolio managers. It was after that survey, which found demand for transcripts to be second only to SEC filings, that the first earnings call transcript vendors appeared on the scene.
Investors, analysts, journalists and other researchers like transcripts of conference calls because they save them time and make it easier for them to do their jobs. Transcripts are more portable, more extensible, easier to translate and easier to search than audio or video.
It’s NOT because transcripts are expensive.
SeekingAlpha.com, a fast-growing company which provides market opinion from expert bloggers to Yahoo! Finance, offers free transcripts to investors for over 500 companies. Investor relations departments can post these transcripts on their own websites for just $200 per event, or they can buy four transcripts, a year’s worth, at a discounted rate. And there’s no fee to provide a link from a corporate website to a free transcript on SeekingAlpha.com.
Other companies sell transcripts to investors, data vendors and to company investor relations departments to post on their websites. Thomson Financial’s StreetEvents transcripts and FactSet’s CallStreet transcripts are available, but mostly only in PDF.
It’s NOT because transcripts are ineffective.
Even though the quality of transcripts can be imperfect, they’re still much easier to use, search and repurpose than audio or video. Transcripts make it easier for analysts and other influencers, including journalists, investment writers and bloggers, to write about your company and raise its profile.
Look at the screenshot I took from Yahoo!’s Site Explorer beta site showing there were 949 “inlinks” to Seeking Alpha’s transcript of Google’s most recent earnings conference call.
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| See the yellow highlights. This search on Yahoo! Site Explorer shows there are 949 links on the Web pointing to Seeking Alpha’s transcript of Google’s Q4 2006 earnings conference call. |
Meanwhile, there were only 397 inlinks to Google’s most recent earnings release on the company’s website. (P.S. I used Yahoo! for this because a similar search on Google returned zero results!).
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| See the yellow highlights. This search on Yahoo! Site Explorer shows there are 397 links on the Web pointing to Google’s Q4 2006 earnings release on the company’s investor relations website. The Seeking Alpha transcript is much more popular. |
That’s a lot of traffic going to a transcript of a conference call and a lot of exposure for the company. People prefer to refer their readers to Seeking Alpha’s transcripts because they’re in HTML (and free). Web users don’t have to use other software or adjust to a new interface. Seeking Alpha also has links to transcripts on companies’ profile pages on Google Finance. Here’s the GOOG page on Google Finance (scroll to the bottom of the page and it’s under More Resources.)
It’s NOT because accuracy is an issue.
Accuracy is a concern, but it’s not a valid reason not to post a transcript from a third-party vendor on a corporate website. While you obviously want the most accurate transcript possible, companies can easily make it clear to investors that they are offering transcripts as a convenience and are not responsible for the accuracy of the vendors’ work. Vendors will also quickly clean up typos and inaccuracies that companies identify.
It’s NOT a legal issue.
There’s no legal justification for not providing transcripts of conference calls. In fact, there’s actually a legal reason companies should provide transcripts. Not providing transcripts discriminates against people who are deaf or hard of hearing and who prefer to read rather than listen. Disability rights laws in a number of countries may apply to the Web.
So why don’t companies post transcripts?
It’s a transparency issue. Plain and simple. Companies don’t want to provide transcripts because they believe transcripts make management vulnerable to investor criticism.
Transcripts give investors something “in writing” to hold management accountable. And executives who aren’t confident and transparent are uncomfortable being accountable for what they say, especially off-the-cuff remarks they make under questioning from analysts and investors.
Of course, it works the other way, too. Companies that currently do provide transcripts of their conference calls and presentations demonstrate higher levels of accountability and openness.
They’re probably more likely to be trusted and, because the information is easier for investors to access, they’re also more likely to be better understood by more investors. Which is a good thing, of course, because it means management’s and investors’ expectations will be more in sync.
I think the excuses companies have been using to explain away the fact that they don’t provide transcripts have worn very thin indeed.
Transcripts are now a marker of transparency when investors visit a company’s investor relations website. — By Dominic Jones
Dominic,
Two or three years ago I emailed you asking you whether you thought there was a correlation between good IR and stock performance. At the time, you weren’t sure if there was any empirical evidence either positive or negative. How do you feel today about this subject.
I’m in the process of launching s new blog for Geosign. I emailed 40 companies for investor kits for the first four “fun” portfolios we’re putting on the site and you wouldn’t believe how bad most of the correspondence has been.
Apple sent nothing but 10Qs and 10Ks, preferring to house most of their information online. Obviously Apple cares little about the senior investor.
Dominic, why don’t companies (especially large ones) put together 3-page colour brochures highlighting the company and its products along with relevant investment information and some small goodies like stickers, product samples, gift certs, etc.?
For businesses that deal with consumers, even taking SEC laws into account, they should be able to do a better job. If Apple sends a great kit and I’ve never bought an Apple product in my life, not only may I invest, but I just might buy something as well.
Also, you never know who I know. That’s word of mouth at its best.
People want transperancy but companies refuse to give it too them. It’s too bad.
Hi Will,
I still don’t know if there’s any hard evidence good communication translates into good stock returns, but intuitively I would think it eventually does.
Unfortunately, your experience with investor kits is symptomatic of the “institutionalization” of investor relations. Apparently there are no individual investors any more. There’s only analysts and institutional investors, a species that apparently gets its thrills from great big slabs of gray text and PDF blobs and MP3s. Not.
Or perhaps, if I’m being cynical, I would say that this is all a reaction to Reg. FD. Because everyone now has the same theoretical access to material information at the same time, the only way companies can give pros an edge is to hide relevant facts deep in the bowels of a 10-K. They know people like you and I aren’t going to read them, but people whose day job it is to read the stuff will do so and benefit.
Thing is, I’ve yet to meet an analyst who complained that disclosures were too easy to read.
[...] Transcripts a sign of transparency [...]
[...] Seeking Alpha’s transcripts also are relevant to corporate investor relations departments in one other respect. A growing (admittedly slowly) number of companies are posting conference call transcripts on their investor relations websites as a service for their investors and to demonstrate transparency. [...]