“How does good investor relations affect a company’s value?” For many SMEs, it is an important consideration when deciding whether to invest resources in investor public relations. Is often. Earlier in the Investor Relations volume, we provided a set of guidelines for companies to establish a good investor public relations system. However, companies need to invest additional resources to build such systems and generate a long-term reputation. As a result, many small and medium-sized listed companies do not need to provide good investor public relations, but should focus solely on corporate operations or only when they have good communication with investors. I am. This volume of Investor Relations uses quantitative data to find out how much value the capital markets are willing to pay for “good investor public relations.” This “added value” not only maximizes shareholder value, but also allows companies to raise capital and drive growth at a lower cost than their peers.
We agree that the effectiveness of a company’s investor relationship management is not measured solely by stock prices, but by stock prices and valuations as the most direct quantitative indicators. A report (1) published by IHS Markit in September 2020 found that the award-winning IR program compared more than 30 IR Award winners in 2018 and 2019 (designated by IR Magazine) with more than 100 peers. I found that they are trading on average. A 15% valuation premium for peers and an average 5% reduction in stock price volatility.
In addition, IR Magazine published a survey report (2) in March 2018 based on responses from 421 buy-side and sell-side analysts and portfolio managers, with 68% of respondents receiving a premium of 5-10% or higher. I found it to apply. For a good investor relationship. Meanwhile, 71% of respondents have allocated a discount of 5-10% or more to the stock valuation of companies practicing unreliable investor relationships. In addition, it is worth noting that Asia Pacific respondents are willing to pay higher premiums to companies that have better investor relationships than other regions. 58% of respondents in the Asia Pacific region add more than 10-15%, compared to 26% in EMEA and 24% in the Americas. (Figure 1)
Figure 1. Source: IR Magazine, March 22, 2018, The Value of IR; Credits: QIC
In fact, previous studies have shown similar results. According to a 2009 joint survey by the Singapore University of Management (SMU) and the Singapore Investor Relations Experts Association (IRPAS) (3), 89% of Singapore-based fund managers surveyed were with investors. We are willing to pay a surcharge to companies with good relationships. And 24% are willing to pay premiums of 15% or more. Therefore, we believe that good investor public relations is an important tool for companies to maximize shareholder value. On the other hand, companies with unreliable investor public relations activities can be punished by poorly rated capital markets.
Figure 2: Good investor relationships can be a powerful tool for creating long-term value for a company. Credit: QIC
In summary, a relationship with an investor is a good investment. You can mobilize the power of capital markets to help your company grow during its growth phase and, in addition, help it survive the crisis. Investors are faced with many investment ideas, so good investment to help small businesses drive “discovery” and get their attention to better understand the company’s investment theory. It is even more important to manage public relations for homes. This long-term communication journey is endless. For information on how to establish good investor public relations, see previous Investor Relations volumes, including: Build an effective IR team, Creating an IR plan, Investor targeting, Key Factors for a Successful Meeting with Long-Term Investors, Things to avoid for IR managementWhen Measuring the effectiveness of IR programsm.
(1) IHS Markit, September 17, 2020, Relationships with investors are a competitive advantage
(2) IR Magazine, March 22, 2018, The value of IR
(3) Lianhe Zaobao, June 23, 2009, Approximately 90% of fund managers are willing to pay a premium to SGX-SMU listed companies that have good relationships with investors.
To provide our readers with a deeper and more comprehensive knowledge of investor public relations from an investor’s perspective, DIGITIMES invites QIC as a contributing partner and shares their insights.This article is Part 13 of the QIC Inside Investor Relations Series and was originally QIC website..).
https://www.digitimes.com/news/a20220630VL201/investor-relations-qic.html?chid=12 Good investor relationships can be a powerful tool for boosting a company’s reputation