IR Magazine’s odd November cover story

By Dominic Jones

IR MAGAZINE, which is a great publication most of the time, has me utterly baffled by their choice of cover story for the November 2007 issue.

Of everything that is happening in the world of IR, why they would choose to make a hopelessly peripheral topic such as virtual worlds — Second Life specifically — their lead story is a mystery to me.

The story basically concludes that Second Life is almost irrelevant to IROs, which makes me wonder even more why it’s the cover and why the headline is “This is not a game.” It is a game.

I’m not saying virtual worlds are entirely irrelevant to IR, but they’re certainly not cover-story material. Well, I guess they are now.

Anyway, there is some other good stuff that has just become available online if you missed last month’s issue. Here are a few pieces that I thought particularly noteworthy:

Managing the queue on conference calls
A good piece by executive editor Neil Stewart that looks at the issues around choosing which analysts get to ask questions on conference calls.

NIRI to back Sun Microsystems’ Web-first approach to earnings announcements
Linda Kelleher, interim CEO of the National Investor Relations Institute, told me about this a couple months ago, but I thought I’d just sit on it for no good reason. But it’s there now in black and white: “…NIRI says that, having discussed the Sun move with legal experts, the SEC and NASDAQ, it will adjust its best practice recommendation. ‘NIRI must be at the forefront of advocating change in current disclosure practices that improve compliance and transparency,’ Kelleher says. ‘For that reason we will undertake a review of NIRI standards of practice and [we are] aiming to issue a revision in early 2008. Where the use of the web and other technologies is starting to be accepted, we would want to reflect that.’”

And in terms of what I’m quoted in the article as saying, it’s accurate. There probably will always be a need for wire services — but only for stuff that no one actually wants, like PR and marketing pitches. When people actually want stuff on the Web, they can easily get in other ways.

Stock exchanges’ IR services
Caroline Thomas writes about stock exchanges getting into the IR services business. Hugin, the NYSE-Euronext IR services business that launched a new website this week, gets mentioned early in the article. In the printed magazine, Hugin took out a full-page ad opposite the article.

Hugin consists of the combined operations of PR wire service firms Euronext bought prior to merging with NYSE. They are Paris-based disclosure wire Company News Group, which Euronext acquired in January 2006, and Norwegian newswire and IR services firm Hugin, acquired in December 2006. Since June 2007, the combined operation is called Hugin.

In its ad, Hugin says it has 1,700 clients across 26 countries. The U.S. is not included in the list, but Canada is. How long before Hugin enters the U.S.? That question is not answered.

Much of the article is given to discussing the conflicts that arise between exchanges’ roles as market regulators and as IR service providers. There are a couple of oblique quotes from our coverage (not attributed though) on the Nasdaq debacle late last year.

The article includes a misleading suggestion that commentators were evenly split on the Nasdaq bundling issue, which is nonsense. When you actually look at the quality of the comments submitted to the SEC by both sides, it’s clear that opposition to Nasdaq ran much deeper and was centered on important principles.

Indeed, opposition to Nasdaq’s initial application was such that the exchange was forced to backpedal on its plans and water down its application.

Role of Corporate Communications in supporting IR
Lak Siriwardene, head of corporate communications as Scott Wilson Group, has some good comments on integrating IR objectives into a broader corporate communications/media strategy. Key quotes:

“It has to be said that our performance has been enhanced by corporate communications, which is playing a key role in generating attention; the publicity we have received thus far has a direct correlation with reaching investors and increasing the share price.”

“The corporate communications strategy must have a clear investor relations element, targeted at both existing and potential investors. The financial calendar dates play a key role in developing the strategy and those dates are also used as a vehicle to communicate significant corporate information, such as growth and development targets, long-term strategy, the order book, and so on.”

And the best piece of all
I love this little gem tucked away in Jeff Cossette’s new monthly column on empirical evidence from academe. It’s about how “good IR” is bad for your stock in a down market:

Talib and co-researchers Professor Kenneth Peasnell and Dr Steven Young looked at 122 companies highly rated in the IR Magazine Awards from 1996 to 2002. When compared with a control group, the events related to Enron and its ilk had a significantly greater negative impact on firms with creditable IR programs.

Why this seemingly counter-intuitive finding? Talib has two theories. She says the awards are the best proxy she could find to measure IR quality. ‘But are we really capturing honest firms with good IR? Or merely corporate hype and window dressing?’ she ponders. ‘If Enron went down, any other company also recognized for its IR practices might likewise be clumped in the same dubious group and therefore penalized.’

Talib’s other theory is that IR actually does push up stock price. ‘It is possible that firms with good IR were trading at a premium before the accounting scandals,’ she concludes. ‘So when the shock happened, they took a bigger fall.’

As I said, it’s a great magazine most of the time.

Related posts:

1. Why almost no one is complying with Regulation FD
2. How to do IR in a bear market
3. No changes please, we’re PR Newswire’s Disclosure Advisory Board
4. SEC unveils IDEA — and that’s all it is for now
5. Cox to announce IDEA will replace EDGAR

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