Friday, March 11, 2011

Comment: Why IROs shouldn’t use the telephone, conduct investor meetings and other hogwash

On March 3, 2011, Inside Investor Relations, a blog (or non-blog according to their editor’s comments?) published by IR Magazine featured an article titled, “Comment: Why IROs shouldn’t use social media”. The article stirred a few comments from parties that are currently involved in investor relations (some readers will have a slight chuckle at the play on the word “currently”). Those who commented argued that times have changed since the days of the fax blast and newsfeeds running off the printing press.
But let’s take a closer look at the merits of what the article itself discussed.

First, the author indicated that IR practitioners don’t blog or tweet, and “rarely put things in email.” One of the reasons given for this is that using these tools would result in selective disclosure.

Indeed a growing number of IR practitioners ARE tweeting and communicating through blogs. This may not have been the case in 2007, but times are changing. Some of us move forward, some earlier than others. Others reminisce or even fight to hold on to the past.

Now let’s tackle the selective disclosure argument. The fear, I guess, is that IRO’s wouldn’t want to discuss anything using social media because it would be to a selective audience. Certainly the author must also be against talking to investors over the telephone, or heaven forbid, in a closed-door meeting. Social media is pervasive and viral by nature. Far less selective than private telephone conversations and one-on-one meetings.

Perhaps the fear is really that an IRO might be held accountable to what they say if they do in fact use social media. There is some permanency to things discussed on the web and anyone and everyone can see it. Why else would the author discuss her inability to differentiate between “something that is simply interesting to investors and something that is considered material enough to be put in a news release”. Unless, of course, she really can not tell the difference between providing context and disclosing new material information. Yikes. Maybe there is a need for an IRO certification program after all. Intro to IR 101 – What is Materiality?

I am not even going to bother discussing the silly comment in the article saying that the target audience doesn’t “view company blogs, YouTube and Twitter to track companies.” There have been more than enough statistics put forward in the past two or three years that say otherwise.

Next, the author goes on to say that communicating with social media and writing blog posts is very time consuming and inefficient – that this time could be better used making ten telephone calls to investors. Hogwash! A well run blog, Twitter account or Facebook Page can save an IRO time. Most of the questions IRO’s get, especially around the time of an announcement, are repetitive. A well aimed blog post just might result in you not having to make those ten calls (or at least they would be much shorter calls).

Oh, right. Everything you say over a social media channel or blog has to go through a long editorial and vetting procedure with legal. What about your telephone discussions to a much more selective audience? Or those one-on-one meetings? Surely you are sticking to a script that has been vetted by legal for those calls and meetings too, right? Most likely not.

Oh, and if you are not disclosing new material information, just making information more readily available and/or providing context, I am sure you can save on some of those legal bills.

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