Intangible measures, such as brand value, long-term strategy and R&D
expenditure, should be essential component of investor communications
NEW YORK, June 9 /PRNewswire/ -- The Disclosure Advisory Board -- a
15-person council of leaders in the corporate, regulatory, investor,
reporting and academic communities that was organized by PR Newswire --
announced today its recommendations for incorporating non-tangible, "hidden
assets" into investor communications to improve corporate disclosure and
help enhance stock valuation.
(Logo: http://www.newscom.com/cgi-bin/prnh/20000306/PRNLOGO )
In a white paper titled, "Return to Strategy," published in conjunction
with the National Investor Relations Institute's (NIRI) annual conference
in San Diego, June 8-11, the Disclosure Advisory Board (DAB) calls for
companies to provide greater transparency on assets that are not mandated
by disclosure regulations but which contribute to the overall value of a
company.
According to the DAB, the investment community has become increasingly
focused on near-term financial metrics as the primary means for evaluating
a company. Non-financial value drivers, such as presenting a clear
corporate strategy and creating explicit links between research and
development spend and new revenues, are difficult to categorize on a
balance sheet and also require investors to take a longer-term outlook.
However, it is these "hidden assets" that the DAB contends are essential
for providing analysts and investors with sufficient detail for developing
a fair valuation of a company.
"The Disclosure Advisory Board has identified a number of challenges
faced by investor relations professionals in communicating adequately to
the markets. These difficulties range from gaining internal access to
sufficient data, to management concerns about disclosing detailed and
forward looking information, to inadequate consistency of reporting,"
commented Mark Hynes, managing director of Investor Relations at PR
Newswire and Chair of the Disclosure Advisory Board. "Unfortunately, the
mandated disclosures from most companies do not allow analysts to apply
fully a premium to their growth potential. As such, companies whose stock
market valuations do not accurately capture their 'hidden assets' should
widen their communications to account for important qualitative measures,
including brand value, corporate strategy and R&D expenditure.
"As the investment community operates on an increasingly shorter-term
horizon, investor relations officers (IRO) should expand disclosure to
include items that do not fall under SEC requirements, but are vitally
important to understanding the full corporate and investment story. By
tapping into overlooked assets such as executive expertise or intellectual
property, IROs have the opportunity to improve their company's valuation,"
Hynes continued.
In "Return to Strategy," the DAB offers practical suggestions on
achieving consistency, using mandated disclosures positively, and
communicating strategy and competitive advantage. According to the DAB,
investor relations professionals should consider the following best
practices when developing investor communications programs:
-- Communicate a company's long-range strategy by linking the value
created by investments in intangible assets to the overall performance
of the company. When appropriate, articulate potential risks and
mitigations that enable analysts and investors to measure success.
-- Ensure that one's communications strategy is delivered consistently
- both regularly and by all parts of the organization. Update the
strategy to reflect market conditions, and if changes occur, be
prepared to explain the situation. Ensure coherence between mandated
disclosure materials and corporate communications.
-- Understand that disclosure materials represent an important
communications opportunity. Rather than simply focusing on meeting
government mandated requirements, approach these communications as an
opportunity to paint the full corporate picture. The role of the IR
professional is central to this. Being part of the planning team
allows the company to communicate its growth strategy coherently and
consistently.
-- Be aware that while trading is changing, and technology is allowing
systems to arbitrage, a long term investment plan is driving these
trades. Influencing the direction of that plan remains a key task for
investor relations.
Jack Kelly, former co-head of the industrial research team at Goldman
Sachs and a member of the Disclosure Advisory Board, commented, "Factors
such as investment in employees, intellectual property or the development
of new products can have a significant impact on future earnings. While
these items may not fall under required financial disclosure regulations,
they can be released at the company's discretion to provide a better
picture of the true value of the company. By creating an overall strategic
communications plan that incorporates tangible and intangible assets,
companies can optimize their relationship with Wall Street and earn higher
valuations.
"It is important in the execution of a broadened disclosure strategy to
ensure that the investor relations officer is kept abreast of the overall
business strategy. The better versed the IRO is in the overall company
strategy, the better the IRO will communicate the corporate message," Kelly
continued.
The complete "Return to Strategy" white paper can be found at
http://response.prnewswire.com/whitepaper/strategy.
A webinar featuring Kelly, who spent 25 years at Goldman Sachs valuing
diversified companies, and William A. Relyea, director of Investment
Banking Research at Midtown Partners, and an expert on valuing technology
start ups, is available at http://www.thedisclosureadvisoryboard.com/. To
read Mark Hynes' blog, Transparency Matters, go to
http://transparencymatters.blogspot.com/.
About the Disclosure Advisory Board
The Disclosure Advisory Board was brought together by PR Newswire in
June 2006 to assess and comment upon the state of corporate disclosure and
transparency. Comprised of 15 individuals with a combined 450 years of
regulatory and compliance experience, the aim of the Board is to debate
current disclosure and governance issues, and based on the discussions,
propose "best practices" for improved financial and corporate reporting.
The Disclosure Advisory Board believes that communication - disclosure and
transparency - lies at the heart of winning back public consent.
Members of the panel are: John Bierbusse, corporate director and
retired equity research analyst at A G Edwards; Janet L. Fisher, partner,
Cleary Gottlieb Steen & Hamilton LLP; Valerie Haertel, VP/director of
investor relations, Medco Health Solutions, Inc.; Jerry Hostetter,
VP/director of public relations and investor relations, Smithfield Foods
Inc.; Deborah Kelly, partner, Genesis Inc.; Mark Hynes, managing director
of Global Investor Relations Services for PR Newswire; Jack L. Kelly,
former co-head, industrial research team, Goldman Sachs; Mary Beth Kissane,
president and founder, Corporate Perception Research; Sam Levenson, SVP
Investor Relations, Sony Corporation of America; William A. Relyea,
managing director, H.C. Wainwright & Co., Inc.; Diane Salucci, SVP, Bear
Wagner Specialists LLC; Martin Shea, EVP, investor relations, CBS
Corporation; Kurt Stocker, member of the board of directors of NYSE
Regulation, Inc. and chairman of the New York Stock Exchange Individual
Investors Advisory Committee; Anna Sussman, director, Investor Relations
and Corporate Communications, Pharmion Corporation; Louis M. Thompson, Jr.,
partner, Genesis Inc., and managing director, Kalorama Partners, and former
CEO, president and board member of the National Investor Relations
Institute.
About PR Newswire
PR Newswire Association LLC (http://www.prnewswire.com/) provides
electronic distribution, targeting, measurement and broadcast services on
behalf of tens of thousands of corporate, government, association, labor,
non-profit, and other customers worldwide. Using PR Newswire, these
organizations reach a variety of critical audiences including the news
media, the investment community, government decision-makers, and the
general public with their up-to-the-minute, full-text news developments.
Established in 1954, PR Newswire has offices in 14 countries and
routinely sends its customers' news to outlets in more than 170 countries
and in more than 40 languages. Utilizing the latest in communications
technology, PR Newswire content is considered a mainstay among news
reporters, investors and individuals who seek breaking news from the
source. PR Newswire's leading services include ProfNet(SM), eWatch(TM),
MEDIAtlas(TM), Search Engine Optimization, MediaRoom, MediaSense(TM),
MultiVu(TM), U.S. Newswire, the preeminent policy newswire in the industry,
Vintage Filings, the fastest growing Edgar filing company, and Hispanic PR
Wire, LatinClips and Hispanic Digital Network, the foremost Hispanic
communications services. PR Newswire is a subsidiary of United Business
Media plc of London.
Media Contact:
Rachel Meranus, Vice President, Public Relations, PR Newswire at
+1.201.360.6776 or rachel.meranus@prnewswire.com
SOURCE PR Newswire Association LLC
 back to top
Related links:
http://www.prnewswire.com
http://www.thedisclosureadvisoryboard.com
Photo Notes:
NewsCom: http://www.newscom.com/cgi-bin/prnh/20000306/PRNLOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com
CONTACT:
Rachel Meranus, Vice President, Public
Relations, PR Newswire, +1-201-360-6776,
rachel.meranus@prnewswire.com
|
