Corporate Perception on Capital Markets11/19/2007, 11:00 AM CET
Long-term strategy, management quality and open communications just as important as financial success for corporate value
Dusseldorf: The study “Corporate Perception on Capital Markets – Non-financial success factors in capital market communications” conducted by the University of St. Gallen in cooperation with Deutsche Post World Net, ING Group, Pfleiderer AG, PricewaterhouseCoopers AG and RWE AG proves what many investor relations experts experience in their day-to-day work: analysts and investors do not just assess financial figures but also look at non-financial characteristics in order to shed some light on the future prospects of a company."
A long-term, value-orientated strategy, a reliable management team and a transparent presentation of the business development are important for the reputation that a company earns itself in the capital markets over the years. A company that has missed its own forecast several times will be less trusted than one that always delivers on its targets. In addition to that, the corporate culture as well as a company’s customer and industrial relations and its public affairs efforts play a crucial role in determining its value. To what extent a company has incorporated non-financial criteria in its financial communications is often reflected in its share price development.
These findings are underscored by the comprehensive empirical study “Corporate Perception on Capital Markets” conducted by the project team of the Institute for Media and Communications Management at the University of St. Gallen led by Miriam Meckel. Together with Deutsche Post World Net, PricewaterhouseCoopers AG and RWE AG, the research team asked more than 200 European analysts and institutional investors from Germany, the United Kingdom, France and Switzerland about the main criteria for their perception of a company. During a press briefing in Düsseldorf, held under the auspices of DIRK, the German Investor Relations Association, Meckel came to the following conclusion, “Reliable and transparent communicators have a significant head-start in terms of trust -- especially among those capital market participants who are professionally engaged in the description, evaluation and recommendation of companies.”
For the companies participating in the study it was important to learn which and to what extent non-financial characteristics influence the decision-making of analysts. While most listed companies nowadays focus on issues such as transparency and corporate governance, it is indispensable for successful financial communications to get to the bottom of the decision-making process. “Investors prefer it if their rational evaluation matches their gut feeling when assessing a company’s value,” according to Ingo Alphéus, head of Investor Relations at RWE AG. “That works best if investors get in touch with real people in addition to the financial figures. That’s not only true for members of the management board but also managers of the day-to-day business. We support that systematically.”
The study also underscores the approach of Deutsche Post World Net. “We’ve just presented our capital markets program as response to the requests and demands by our investors. In addition to hard measures such as shareholder value, cash generation and cash payout, the program focuses on transparency and consistency in reporting – in other words those non-financial factors that the study highlights,” said Martin Ziegenbalg, head of Investor Relations at Deutsche Post World Net.
The study is available for download as a PDF.