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There are also many BENEFITS to making this feature available on your company website as it will:

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• Provide new methods of visualizing financial relationships with interactive graphing tools
• Seamlessly integrates into any corporate or investor website

Click the button below to view a live demo.

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An interesting discussion developed when Dan Dykens, CEO of Meet the Street and host of #irchat asked “What do you think about Rivel Research’s buy-side survey which suggests that the valuation differential between good and bad IR is 35%?”

This question stirred up quite a debate, especially since no one had access to the methodology or a definition of what constitutes “good” vs “bad” IR.  So the responses were based on the information we had.

Shortly thereafter, Brian Rivel, president of Rivel Research Group, the firm specializing in perception research for public companies posted the following comment:

Glad to see that this data sparked such a debate! One of our most popular findings, as you might imagine. Just as an FYI, the study goes on to define what IS superb IR, according to the buy-side. That result can’t be looked at in a vacuum. I would be happy to provide more flavor to anyone who is interested.

With that, I jumped at the chance and contacted him for an interview:

SJ: Let me begin by addressing something that has been getting a great deal of discussion lately. One of Rivel’s research findings last year dealt with IR’s role in a company’s valuation. There have been conflicting accounts or interpretations of the research; can you clear this up for us?

BR: Definitely. As you can imagine, this is one of our most popular findings as it really comes as close as you can to putting a tangible number on the value of IR. And that always sparks such a fervent debate. Last year we surveyed over 250 buy-side investors from various industries on, among other things, whether or not good IR has a meaningful impact on a firm’s valuation — nearly three out of four said they believe that good IR does have an impact.

We then asked for them to quantify that impact and what we found was quite compelling. IR can account for a total variance of 35% in a company’s valuation – ranging from a premium of 10% for “superb” IR to a discount of fully 25% for “poor” IR. This is notable because just three years ago when we asked the same question, buy-side investors estimated a discount of 15%, so the risk associated with poor IR is increasing, given the level of uncertainty out there.

SJ: Now that begs the question, what constitutes “superb” IR?

BR: Thankfully, we asked the buy-side this follow-up question as well, and what we discovered was while “superb” IR rests on the usual tenets of good disclosure and responsiveness and ample access to senior management, the one standout was transparency.

SJ: But wait, you mentioned disclosure and transparency. Aren’t they essentially the same thing or is there a difference?

BR: Actually there is a big difference in the eyes of the investor. Investment professionals define transparency as clear, unambiguous information through which companies articulate definitive strategic goals, why they are important and the drivers by which they will be achieved. In essence, it’s the clarity of message that brings forward key challenges, how they are being addressed and frank, forthright discussions of the company’s prospects … in good times and bad. That last part is quite important as we’ve seen in many of our custom projects. Being transparent when times are rough goes a long way and is genuinely appreciated by the investment community.

On the other hand, disclosure is simply providing data, metrics, operating figures, what have you, on the many facets of the company, typically in the financial realm, but market share, product development, etc. come into play as well. Normally, disclosure in itself does not provide any color or interpretation on management’s part.

So a company can provide mountains of data on their operations, but they fail to provide any discussion or insight into what it means now or in terms of future performance…for example, how they are connecting the dots between A and B (A being where we are now and B being where the company expects to be in the future). And I can’t stress enough the key to having transparent communications is openness, honesty and frankness.

SJ: I can already hear IROs buckling at the prospect of giving away more information since managements loathe giving away too much disclosure in the interest of their competitive edge. Have you found in your research what the perfect balance is between too much information and not enough, especially as it relates to earnings guidance?

BR: Interestingly, our research shows that the recent implosion of the markets has altered expectations about guidance. First of all, when asked to name the most important aspects of superb investor relations, guidance rarely makes the list. Secondly, guidance is not all about earnings. Relative to a set of five types of corporate insight, earnings guidance ranks fourth. What the investment community is looking for is qualitative insight on the strategy.  How are you going to execute your strategy to achieve the goals you have outlined?  They are saying “connect the dots for us.”

But to answer your question, we haven’t done a definitive study on such a balance since it really varies between types of companies, their sectors, etc. Anecdotally, I can tell you from many of our custom research studies that investors do understand the competitive nature of their business and are aware there’s a fine line between too much and not enough. So they get that. But what they prefer is a sufficient level of disclosure surrounded by a discussion on what management thinks about it. They don’t want volumes upon volumes of data they can’t use. They want management’s take on the data and how that translates into future financial performance. After all, managements theoretically have the best view of what’s going on in their company and their industry.

SJ: So, in a sense, you are saying management has to do more to appease the investment community, even if they think what they are giving is adequate?

BR: In a manner of speaking, yes that’s the case. But it gets back to the original question about IR and valuation. Since the IR program is almost always viewed as an extension of management, if a company wants that premium of 10%, then becoming a superb IR department means having to provide transparency in their communications. It’s not necessarily MORE information, rather, the right information and the right level of transparency…“this is our strategy, these are the key elements, this is some detail around those key elements and this is how we think this will produce future financial performance.”   Without it, you risk being judged on the poor side, and with the continued market malaise, why run that risk when detailed and transparent investor communications are entirely possible with the right amount of work on the company’s part?

SJ: Sounds like a prudent move, but I wonder if management balks at giving such insight in what is a heavily controlled Reg. FD world we’re living in nowadays.

BR: I’m sure there are many internal discussions (or debates, I should say) between the IRO and their management about this subject. But in the end, our research shows that transparency helps set the stage for management credibility, which is at the core of investment decisions today. Having credible senior leadership always tops the list of factors investors take into account when making decisions about a company.

Transparency is also an IR code word for education since now more than ever, educating the investment community is an imperative for IROs as preconceptions about a company’s investment attractiveness are challenged by new economic realities.

SJ: Thank you, Brian for enlightening us on this ever-fascinating topic of IR’s role in valuation. If you have an update to your research, please let us know.

BR: Thank you, Sheryl. I will be sure to that.

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The initial reaction by many IROs is to ‘not engage’ with these individuals and to simply ignore these tweets or blog posts. This approach is based on policies forged years ago related to message boards and chat rooms. The challenge with these boards is selective disclosure. It is difficult to answer one comment and not another because the non-answer may be seen as acceptance. So companies need to either answer all comments, or none. It’s not surprising that companies choose to not respond to any of the messages.

However, today things are different on the web. Financial blogs and social networks have given the investing public and activists a voice and for many companies there is a constant conversion happening about your industry and your company. The policy of not engaging in this conversation is that it creates a vacuum that is quickly filled by rumor. Also, companies need to use the same channels where this information is being shared. Issuing a press release on its own is no longer enough to deal with an issue and is like bringing a knife to a gun fight. To be effective you need establish your ‘voice of authority’ in the same channels as the rumors are being spread – on Twitter, blogs, YouTube, etc.

During a recent seminar put on by NIRI Silicon Valley, Laura Graves, Cisco’s IRO spoke about the power of using social media to address rumors. Here is a tweet put out by @NIRISV

The concept of ‘voice of authority’ is not based on responding to each and every post or comment written about your company. It is about publishing a consistent stream of content into the social networks and websites that are most important to your business.

Establishing a new channel of communication gives the company a tool to help guide the discussion and to focus on the issues that the company feels is most important. As well, having your voice of authority in the community allows you to address any misinformation or rumors and fill the void with approved messaging. While this may not entirely displace rumors, it does go a long way to influencing the community and how your company should be viewed.

This is the same tactic as dealing with the media. It is better for your company to speak to the media because if you don’t your critics fill the void. This is the same on the web.

How to establish your voice of authority:

• Listen and monitor the conversation to see what is being said about your company and where – not just on Twitter but blogs, wikis and any other social forums

• Adopt the social networks and channels that are used by your stakeholders

• Ensure your IR website is up to snuff. When using social media you’re going to be linking back to your site frequently, so make sure it follows best practices and contains up-to-date content

• Publish (restate) your information to social content networks and embed them on your website:

• Videos on YouTube (or Vimeo if longer than 10mins)

• Key presentations on SlideShare

• Key documents on docstoc

• As you add content to your website or onto content networks use Twitter to announce it is available and link back to your site.

This is not something you can create over night, or in the middle of a crisis. It is important to be proactive and work to establish your company’s voice across various web channels. When the time comes that you need to correct the market or deal with a rumor, you’ll have the tools at your disposal.

With a constant stream of content being published into your primary networks you will establish your voice and be part of the conversation. This is a tactic that is being employed by many companies today and is proving to be an effective way to guide the discussion.

Start establishing your voice of authority today and you’ll be well armed for your next fight!

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Based on the excellent turnout there doesn’t seem to be any doubt that companies are gradually realizing that online conversations are happening whether they are a part of them or not.

Our panelists had a lot of great information to share and as usual the Q4 team tweeted the event, but we wanted to provide a snapshot of the relevant points as it relates to IR professionals (for the most part, the notes that follow will be a combination of all ideas presented in the webinar).

AGENDA

• Why Monitor?
• Where should companies look for conversations?
• What should they be listening for?
• Who should they engage with if anyone?
• How and what tools should they use to monitor and engage?

Why Monitor?

Social networks have enabled anyone who uses them to be an influencer – so just because companies are not listening to the online conversations, doesn’t mean they aren’t happening.

Online conversations can be classified into three buckets:

1) Way it was – one-way flow of information with companies broadcasting to targeted financial and media outlets.   Obtaining print coverage was a key objective and way of showing the effectiveness of a particular press release or success of a product launch or other campaign.

2) Now – conversations are multidirectional and everyone has a voice which makes it difficult to track everything that is being said.  So monitoring is essential as social media is a dialogue, not a monologue. “Unidirectional information flow made it easy to see a storm coming, with the new you can’t” – RBH.

3) Where it is going – eBay in particular wants to create a communications hub so they engage with their stakeholders, and social media is part of their IR plan.

Monitoring will not only enable you to see what is being said about your company, but may help you uncover business trends you can incorporate into the overall business strategy thereby potentially growing your business.  With respect to IR, it will help you manage any misperceptions about your company that might impact your stock price and company reputation.

Social networks can spread information quicker than in the past, so monitoring online conversations in real-time will help you choose to respond to any rumours or erroneous information by proactively correcting the misinformation before the markets have time to react.

Where should companies look for conversations?

In general, if you want to get a sense of what is being said about your company the panel suggested starting with individual platforms.  For example, if you want to see what is being said on Twitter, you can simply type in http://search.twitter.com or go to http://Peoplebrowsr.com.   Richard uses Seesmic desktop – you can save your searches and see them in real-time.  (You can do the same with TweetDeck).

If you don’t find a lot of conversations happening on the platforms you are searching, then you shouldn’t put a lot of time and effort into being on those platforms – Richard borrowed a phrase “Fish, where your fish are” –  which makes sense.  As you need to be familiar with and actively using the social networks that your stakeholders are – as stated earlier, social media is a dialogue, not a monologue.

Other places to look for conversations, especially for IR professionals are financial blogs.  One idea he had was to tweet the company’s upcoming analyst day.  Interestingly, a lot of financial analysts started following him and he followed them back.  He actively engaged with them on Twitter and even met a few of them in person.

Serena stated that some companies who are predominantly held by institutional investors don’t feel they have to use social networks to engage with this key audience.  She rightly points out that if you are not providing information over these channels, they are accessing the information some other places on the web, such as the Motley Fool and Seeking Alpha.

According to Seeking Alpha, they are the largest financial blog aggregator with four million unique users/month (with 25% institutional investors).    This provides proof that this key stakeholder group is using social networks to gain and share information about your company.

What should companies be listening for?

Every company has different goals and this will determine what you want to monitor and subsequently find out from those conversations.   For example, if you discover a blog that has written a negative post you should look at that post in the context of the total body of work.  One way to find out if you should pay attention to this particular blog is by using http://compete.com which provides an overview of website traffic and overall trends of the blog.

The rationale here is if the person/company responsible for the blog doesn’t have a lot of website traffic you likely don’t have to invest a lot of time tracking what they are saying.  The same goes for Twitter – if a person tweets something negative about your company, and they don’t have a lot of followers, then they can be put on the back burner.

On the flip side of this, the size of the audience isn’t necessarily a key indicator of whether a particular person has the potential to damage your company’s reputation.  For example, a person who has a small following on Twitter may have something interesting to say.  So if this information is shared, the speed that this gets carried across the web can mean this can be retweeted to millions of users!

Social media is an emotional investment with credibility of relationships built over time.  The time you invest and personal input you invest engaging on your selected networks will eventually pay off and allow you to discern the credible from the non-credible.

Who should companies engage with if anyone?

With experience as both an internal IRO and consultant, I know all too well that some people just want to speak to a live person to vent about the current price of the stock or the company in general.  The same holds true for those investors using social networks – some of them just want to post their two cents to get it off their chest.

Richard said he engages with anyone on Twitter – although he is careful about responding to everyone who might tweet a complaint. He feels that companies have to be cognizant of the Big Brother element in that they don’t always want to feel that the company is only monitoring the negative comments.  As such, he treats all comments on a case by case basis.  So for example, if someone has posted some blatant misinformation, he will correct them.

I agree with Richard on this front, and IROs should take this advice when dealing with shareholders who have clearly communicated some erroneous information.  Actively engaging in and monitoring online conversations is key.  It will allow you to respond quickly to negative/misinformation and potentially avert any impact on the share price.

Another idea of who you should engage with is to create a program on how you respond to particular comments.  For example, you could use the things that are being said about your company and pick out any trends – that way you can put together statements in advance.  Over time, the list will develop as you come across new things/issues.

How and what tools should they use to monitor and engage?

The tools you decide to implement depend on the objectives of your social media program and what you are trying to accomplish.  For example, do you want increased traffic to your website, increased media mentions? While every company will have different goals and objectives, one way to view your social media efforts is by determining the ROI of your program.
For example, eBay uses the following 7 ways to look at their social media efforts:

1. Increased media mentions
2. Increased traffic/unique visitors
3. Number of views/increased content spread
4. Accelerated message
5. Increased SEO
6. Brand advocacy
7. Reducing costs/expenses

From an IR point of view, you should intertwine your social media efforts into your IR program.  Similar to your existing plan you should set measurable short and long-term goals and objectives, identify target audiences, develop strategic messages and tactics and activities to deliver the program.  Of course monitoring is key to determine the effectiveness of your efforts so the plan can be fine-tuned as needed.

There are a lot of free and paid-for services out there.  If budget is a consideration, Richard recommends setting up search terms through Google Alerts http://www.google.com/alerts. Serena likes http://socialmention.com – it provides sentiment by letting you know if the majority of discussions are positive or negative and best of all it’s free. http://Peoplebrowsr.com does same thing and is great for larger cos./brands. It provides a plugin to download charts which gives you concrete data you can provide to management.

If time is your concern, than you should consider future tweets, as it allows you to schedule tweets to post at a future time.  Serena especially likes this one, as she can input her tweets when she can and then they get posted while she is doing other things.

There are many monitoring services out there and you shouldn’t be afraid to pick up the phone and call the ones you are interested in.  Although before doing so I would recommend you have some goals in mind.   Better yet, send out a message over your social network of choice – you may be surprised by the response you get and you may even get some feedback from a fellow IR professional!

Interesting tips from Webinar:

We had a lot of great questions and excellent input from our panelists.  However instead of providing a list of the Q&A, I thought I would compile some interesting thoughts/ideas that came out of our discussion:

• Try using two monitors on your desk – this is an easy way to manage your time with one being dedicated to social media and the other for your day-to-day work.
• If you are monitoring the online conversations already, you could try amalgamating your stock monitoring services with your social media efforts – Cisco does this, so if they see a web-rumour that might impact their stock, they address it on their blog.
• Stay connected with the other groups within your company – for example, Richard has regular meetings with the IR/PR/Legal team before tweeting each quarterly call.
• Put together corporate disclosure messaging which can apply to all your social networks.  eBay has four standard tweets that precede the earnings releases that links to & refers to disclosure language to address RegFD. Here is a link to eBay’s social media guidelines they created for corporate disclosure: http://bit.ly/1GCqKQ and cautionary language published around earnings and link to Twitter http://bit.ly/yeR7q
• If you decide to live tweet your earnings call, consider preparing the tweets before it starts (you can extract the key elements from the release) which will ensure streamlined messaging.

It is easy to see that social networks have changed the IR profession and the way companies communicate with their key stakeholders.  In spite of this, the role of the IRO hasn’t changed – it is still the conduit between the investment community and management.  So it is important for you to go where the conversations are happening.

As in the past, no analyst is going to cover a company without doing research first.  And the research platforms of today are the web.  Blogs and  social networks are another layer to the research and you can be sure that they are setting up the same search terms you are to find out who and what is being said about your company.  The goal of the IRO is still to make the investor and analyst job easier and you want to ensure that you are a part of those online conversations to guarantee these key stakeholders are getting the correct information.

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What follows is some of his advice to IR professionals for keeping pace in this rapidly changing regulatory environment.  He also discusses current challenges and opportunities and ways to address them. 

CHALLENGES & OPPORTUNITIES

Combating External Communications 

Regulation is evolving so rapidly it has become one of the key challenges for IROs right now.  All of these regulations clearly have an impact on how companies are currently conducting business and IROs should be good at:

1. Staying at the forefront of communications and keeping on top of what is being said externally about the company.
2.  Taking that information back to management and incorporating this into your strategy for dealing with shareholders.

Doing More With Less

The current economy has imposed budgetary constraints on companies which has made looking for ways to “do more with less” another key challenge.  Some ways to be more efficient and effective include Notice and Access tools and making improvements to your IR and corporate website.  The IR website is the dominant channel for investor communications and is one of the first places that investors, analysts and the financial media go to for company information.  So it is extremely important that is conveys your investment proposition and outlines your business strategy so potential, current and long-term shareholders have current and up-to-date information at a click of a mouse.

NIRI understands the importance of the website, as they will be launching a new version of theirs in mid-July.   They want members to use it as a first access point and are slowly revamping how information is laid out.  For example, they will group information they put out in categories or ways members will naturally go about seeking that information. The changes are expected soon.

Shareholder Communications

Another challenge facing IROs is how they communicate with shareholders.  Social networking can increase audience reach and allow companies to get to know their shareholders better through direct interaction – as traditional press releases, earnings calls and corporate presentations can be viewed, shared and disseminated on Twitter and discussed on blogs.

Jeffrey sees IR as the gatekeepers in social media and with companies slow to adopt these tools, feels IROs are well positioned to take the lead on implementing this into their communications strategy. “I think IR is in position to work with it. Whether we like it or not, this will happen around IR people. It will touch IR in a way where you can’t be sheltered. So you will have to deal with it—and it’s a good idea to start in a position of leadership, instead of waiting for it to happen to you.”

To summarize, in the coming year, there are three areas that he feels IROs will have to improve their professional skills:

1. Legal – as the leader in FD compliance, IROs must keep apprised of all of the regulation changes and stay on top of understanding what those changes mean. 
2. Social Media – IROs “must understand those communication vehicles. It’s incumbent for any IR person to try blogging, Twitter and using social mediums to bring the discussion back to company. Become an expert in it—that’s my advice now. That also relates to the regulatory and legal side. By understanding this, you can understand how to use it in compliance with Reg FD.
3. Financial Education – IROs need to become educated on alternative trading systems such as dark pools to help them understand who is trading their stock.

All of the aforementioned are ways in which IROs can increase their importance within the company.  For example, staying on top of all the regulatory changes can help elevate you to a key resource within the company.  Secondly, being proactive and communicating in social media forums will help you build better relationships with shareholders and increase your company’s profile.  It may also help you address contentious issues and address them head on in a timely manner before they escalate into a crisis.  Lastly, keeping apprised of alternative trading systems will help you understand  who your investors are and may even provide insights on the hedgers in these areas.

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Mike McDonald of WebProNews cites an interview with Tarla Cummings, Social Media Manager from Location3 Media from the SMX Advanced Conference recently held in Seattle, WA.

When looking at your social media campaigns, Tarla discusses the acronym M.O.M. which stands for Monitor, Outreach, Measure.

MONITOR

Companies should make it a top priority to be in tune with who is saying what and where about them.  They should know exactly where they are being discussed across blogs, wikis, forums, tweets and any other social forum they can think of.

Mike points out “we used to refer to this practice more in terms of reputation management than we did marketing.  However, if there is one major takeaway about social media here, it’s that marketing and reputation management are getting closer and closer to being synonymous.”

Keeping track of everything that is being said in public forums sounds like an onerous task!  There are services out there, both free and paid – for example you can subscribe to free Google Alerts for mentions of your company.  Also, recently during the Trends in Media and Technology Session at the NIRI Conference in FL, Serena Ehrlich of Start-up Army cited a few more free monitoring services such as www.search.twitter.com or www.socialmention.com.

Dick Johnson of IR café was also on the panel with Serena and after the session, put together a list of monitoring sites and services he incorporated in a broader IR 2.0 menu he compiled for IROs learning about new technologies and connections in web and social media.  You’ll need to scroll almost to the very end of the document – the list is a good starting point.

In the context of monitoring social media, Brian Solis in his recent article “Unveiling the New Influencers” states that “…we need assistance in order to hear and see relevant conversations and the related people and communities where they emerge and inhabit.”

He then provides a comprehensive list of the “tools available so that we can start the process of uncovering the unknown and plotting our next courses of action which starts with the heading “Searching the Social Web”.

OUTREACH

Once the social forums are identified, companies should become active participants.  In particular, if someone has posted something negative about the company make an effort to win them over.   This can be beneficial in that it reflects well on a company to have made a public attempt at rectifying a negative situation – although he notes not everyone can be swayed to come back as a loyal consumer of your brand.

Please note that he is referring to this in a marketing context in which someone is unhappy about a product or service.  From an IR perspective, I would tread cautiously when responding to upset investors in a public forum.  I would assess each post on a case-by-case basis and would respond for example, if someone has posted something blatantly incorrect.  As in my view that would be in the best interests of the company and its shareholders to do so.

It is logical to want to respond to and correct any erroneous information about your company.  However, as previously stated, keeping track of everything is a large undertaking.  So as an IRO how do you go about staying on top of and addressing everything (in particular negative comments) being said about your companies online?  Serena (from the same panel cited earlier) points out a very valid consideration –  that it is not necessary to address all of the negative comments, as they may be coming from people who are not widely followed anyway.  Instead, she suggested investigating how much traffic some of the negative bloggers get first through sites such as www.compete.com, www.quantcast.com and www.alexa.com to help determine whether it was necessary to respond.

MEASURE

Okay, now for the crucial part – how do you measure all of this effort?

Mike feels that social media is not as difficult to measure as one would think – he states that a decent analytics package will provide a good idea about where the information is coming from.  One sure way to be precise is to  “simply make sure everybody is on the same page about your goals for these campaigns before you get things rolling.”

Further to this, Ben Straley from Meteor Solutions in this interview states “when you set goals for your social media campaign, you need to ask yourself what you want to accomplish and then measure your efforts. The type of business you operate actually determines what you should measure. Ultimately, the value of social media is not determined by how much money you make. Instead, it is determined by how your business receives value from it.”

I completely agree with Ben when he states you need to ask what it is you want to accomplish.  One way to help you do this is to put together an IR plan in which you set measurable short and long-term goals and objectives, identify target audiences, develop strategic messages and tactics and activities to deliver the program.

Of course, the plan must be monitored to measure its effectiveness and fine-tuned as needed.  In my experience as both an in-house IRO and consultant, a typical IR plan is measured on an annual basis, but like anything, this can differ based on a company’s particular business strategy.

Some examples of what to measure may include new institutional investors or an increase in holdings by existing investors, analyst coverage (increased coverage, improved recommendations), investor perceptions, media coverage, number of face to face contacts made through roadshows and meetings with targeted investors, website visits etc.  This is by no means a comprehensive list and again the specific objectives you set, will drive what is measured.

If you do use social media as part of your IR program, the resources I outlined above should give you a good starting place to keep track and measure what is being said and even give you insights on how to appropriately respond when necessary.  It will also allow you to proactively report back to management and the board keeping them apprised of what is being said about the company and nipping any potential issues before they get out of hand.  After all, there is nothing worse than getting a phone call or an email asking you about a situation in which you don’t know about.

If you are currently using social media and measuring your efforts, I’d love to hear what services both free and paid you are using.

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From my discussions with IROs whose companies have not yet taken the plunge with social media, the likely reasons for CEOs abstaining are concerns about disclosure risk, lack of time and quite frankly a discomfort with technology beyond email and browsing. This is not a slag but rather a reflection of the feedback we’ve been given with respect to senior executives adopting new technologies – oftentimes they simply prioritize other things.  Their social networks happen in other arenas and they may have other senior executives within their organizations actively involved in social media.

The topline results taken from UberCEO’s blog post reveal that:

• Only two CEOs have Twitter accounts.
• 13 CEOs have LinkedIn profiles, and of those only three have more than 10 connections.
• 81% of CEOs don’t have a personal Facebook page.
• Three quarters of the CEOs have some kind of Wikipedia entry, but nearly a third of those have limited or outdated information.
• Not one Fortune 100 CEO has a blog.

In reading the Uber post, be sure to scroll down to the comments. There are references to some interesting articles there as well, such as Doug Cornelius’ of  Compliance Building who shares his compliance risk perspective in ‘Corporate Blogs and Tweets Must Keep SEC in Mind’ and another by Dan Haugen of the Minneapolis Post on Best Buy’s new CEO, “Is Best Buy’s Brian Dunn the Most Socially Networked CEO?”

Should CEO’s get involved in social media? Those that do send a very clear message in terms of their transparency and their personal interest in listening to their stakeholders. Where there’s a willingness to get involved even a busy CEO will find the time with the support of a good team and the use of mobile devices. But the answer to the question in my opinion is really, “it depends”. Most organizations can benefit from involvement in social media but whether it happens with the CEO or other senior level executives really comes down to corporate strategy, division of labour and who would be most effective and committed to continuing the conversation.

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Mike Willis, Partner, PricewaterhouseCoopers
Chairman, XBRL International

Panelist(s)/Co-Speaker(s):
Michael Becker, VP, Global Disclosure & Financial Reporting Services
Business Wire

This session was quite comprehensive, so I thought it would be useful to discuss the agenda that was put forth:

WHY IS THIS RELEVANT?
Public companies push out a lot of IR content such as earnings releases, quarterly reports and annual reports.  Once disseminated into the public domain, third party information intermediaries distill, transcribe and structure the company reported information into their proprietary taxonomies and sell that structured information to the analyst community.  This third party intermediary information is also available through sources such as Yahoo! Finance, Google and MSN Money.  From these publicly available sources IROs can directly observe the omissions, errors and other communication problems created by the third party intermediaries such as changing disclosure concepts and/or omitting key company specific unique disclosures.  This intermediary distortion in turn can lead to inquiries that don’t make any sense or worse, no inquiries at all – which means the investment community is solely relying upon the data transcribed and rendered by third party sources, thereby diminishing the company’s opportunity to correct any errors.

If you are skeptical of the degree of errors and omissions to your company reports please take a minute right now and go to the public sites and review the data available for your company and compare that information to your company reports.  “The data provided by intermediaries is incorrect as often as 30% of the time and incomplete 100% of the time“. The typical omission is the unique company specific disclosure, which is highly relevant to company IROs.

This is unfortunate, as preparing and finalizing material documents is typically a very time consuming and costly process, largely due to manual assembly and review processes that draws upon a lot of internal resources such as the finance, legal and IR department’s time to compile, review and publish – not to mention the costs associated with filing with the regulatory bodies and mailing out hard copies.

WHAT IS REQUIRED?
As some of you may know, in January 2009, the SEC introduced a phased mandate for filing in XBRL starting with the largest companies with a worldwide public float of greater than $5 billion – periods ending on or after June 15, 2009 and then extending to all sizes of companies over the next three years. The rules require companies to provide their financial statements on their corporate websites in an interactive data format using XBRL at the same time their financial statements are submitted to the SEC.

Content Requirements
In the first year of filing in XBRL format, issuers are required to tag each unique disclosure concept in the company primary tables (balance sheet, income statement, cash flows, changes in equity) and “block” tag (e.g. one tag per note) the financial statement footnotes and schedules.

In all subsequent years of XBRL formatted exhibits, issuers are required to tag the financial statement disclosures and also individually tag each significant accounting policy, table within a footnote and each quantitative amount within a footnote.  It is this second year requirement that significantly enhances the volume and accuracy of company disclosures available to the analyst community in a very cost effective, accurate and timely manner.

The XBRL Exhibit is required to be filed concurrently except for the initial report in each of the first two years which would be due no later than 30 days subsequently.

For purposes of the company SEC exhibit, the MD&A, executive compensation, or other financial, statistical or narrative disclosure outside the financial statements is not permitted to be tagged.

Corporate Website Posting Requirements
The XBRL filing is to be posted on a company’s corporate website by the end of the calendar day submitted or required to be submitted to the SEC.  The XBRL exhibit must remain on the website for at least one year; however, legal liability provisions are phased out over a two-year period with no “required” involvement by the auditor.

The US SEC rules will apply to public companies and foreign private issuers that prepare their financial statements in accordance with U.S. generally accepted accounting principles (U.S. GAAP), and foreign private issuers that prepare their financial statements using International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

WHAT IS IT?
XBRL is a freely available international information standardized format specifically designed for business information.  As such, it is specifically designed to provide supply chain standardization to address pervasive process problems.  XBRL is applicable to business information, related business rules, formulas and controls to not only to make financial information easier for investors to analyze, but also to assist in automating regulatory filings and business information processing.

As an Internet standard, XBRL can be used to create a common language for disparate proprietary software applications to more seamlessly communicate.  This is sort of similar to html but in a more granular manner and specifically for business information.

WHAT’S IN IT FOR THE ISSUER?
There are many implications of using XBRL to improve processes.  For example, issuers can implement using the bolt-on approach in which filings and reports are created following the existing process and converted to XBRL once finalized, either in-house or by a third party.  There is also the embedded option, which would enable companies to map their disclosures to the XBRL US GAAP Taxonomy directly within their report writer or consolidation application.  Pushing standardization further back into the business information supply chain provides structure for automation of downstream processes including the accurate rendering of XBRL-tagged SEC filings that can be accessed via your website with many interactive features.

Embedding XBRL in corporate reporting processes enables:

• Seamless exchange of information between software applications like your website and your analysts’ modeling applications,
• Automation of manual processes = lower costs, improved quality & timeliness like for your summary tables and graphs provided on your website,
• Enhanced transparency, access and control of information contained across a wide range of disparate internal data stores similar to the wide range of internal data stores that you are trying to access to address performance related inquiries,
• Improvements in data quality and access, and
• Better access to more relevant information for better decision-making, enhancing business intelligence and performance management information.

XBRL is more than a trend that IROs must be cognizant of – it will soon be mandatory for all U.S. based issuers and there is a voluntary program currently taking place in Canada to help the Canadian marketplace gain a greater understanding of this information standard.  Therefore it is essential that there is a full understanding how communication between the investor community and IROs evolve with the XBRL standard.  So stay tuned for additional blogs and presentations on XBRL.

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All companies make a choice (consciously or unconsciously) in deciding how they will present themselves to the market. The quality of the information provided to the market is a factor that contributes to increasing valuations and lowering cost of capital. This “premium” is not something a company can obtain for itself over night, but even incremental market gains from a long-term investment in building a disclosure “brand” can easily justify the direct cost of that investment.

Recent research by McKinsey, cited in a recent Globe And Mail article, suggests that retail or short-term oriented investors seldom trade enough shares to make a real difference in a company’s long-term share price. The largest shareholders, such as pension funds or mutual funds, also often have little influence over the price of the stocks they hold, because of their emphasis on tracking performance relative to a published index.

 McKinsey concludes as follows:

This leaves a group we call “Fundamentals Investors” because they buy or sell stocks based on a long-term perspective of their intrinsic value relative to current market price. They also buy positions large enough to exert influence, as activist investors, on the board and management. These firms typically hold a small number of companies’ stock, and they trade less frequently – but, when they do they trade large enough blocks to affect the stock price.

Fundamentals Investors should be the target audience of a company’s investor relations strategy. Because these investors are more interested in company and industry fundamentals than in short-term performance, communications strategies should focus on the company’s long-range strategy and the industry’s prospects. Investments in growth projects, the pipeline of new products, fundamental profit metrics such as customer profitability, attrition or churn rates, and major market trends are all critical for these investors.

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One of most insightful for me was with Samuel DiPiazza, the CEO of PricewaterhouseCoopers. PWC has been a leader in the next generation of reporting – they call it value reporting – where the financial report is about al lot more than earnings and financial information. XBRL and the Web 2.0 are poised to transform reporting, where the focus will not just be on compliance but on transparency.

I wonder whether PWC could finally cash in on its leadership position in this area. More important, next-generation reporting could help companies be better understood by their stakeholders, including shareholders, not to mention bring some transparency to financial markets and in doing so possibly avoid crises such as the one we are currently experiencing.

Transparency is certainly a signficant trend in corporate disclosure that we’ll be covering more in this blog over the coming weeks.

Technorati Tags: Q4 Web Systems, Q4, XBRL, Corporate Disclosure, Corporate Reporting, Best Practices, PWC, Tapscott, Davos

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