Quiz: How well do you know IR?
1) Should your Chinese listed company voluntarily disclose environmental information?
2) Should your annual report disclose ad spending?
3) Vienna Stock Exchange-listed company annual reports are agonizingly difficult to read. Are they hiding something?
4) Can we rely on disclosure to incentivize corporate responsiveness to the climate emergency? (2 points)
5) A hurricane harmlessly passes over your firm’s operations. Should you release a ‘no damage’ report?
6) Is sadness good for the environment?
7) Highly rated ESG firms are more likely than others to have promptly withdrawn or suspended their operations in Russia since that country’s invasion of Ukraine – correct?
8) Firms that issue management guidance in conjunction with face-to-face investor meetings reduce investor uncertainty in subsequent earnings announcements by:
a) 5 percentb) 10 percentc) 30 percent
9) Which sort of request is most frequent during analyst Q&A?
a) Elaboration b) Justification c) Data
10) What percentage of S&P 1500 CEOs appeared on a podcast in 2020?
a) 6.4 percentb) 22.4 percentc) 31.4 percent
11) Companies based in which city are most likely to experience elevated trading volume and stock return volatility around earnings announcements?
a) New Yorkb) Wheeling, WVc) Tokyo
No. Analyzing the environmental information content of all Chinese listed company annual reports from 2004 to 2020, Tianjin University researchers find investors abhor any mention of the subject. Study authors conclude: ‘Listed companies may lack the incentive to engage in environmental management and are reluctant to disclose environmental information.’
Maybe best to just avoid the subject. While a study of US firms finds ad spending disclosure is associated with ‘a decrease of 0.0028 in idiosyncratic risk, which translates to an arc elasticity of 7 percent’ and is most effective for manufacturing firms, researchers also believe their results ‘identify an avenue for the chief marketing officers to play a greater role in managing investor relations’.
Likely not. A Mendel University study detects no correlation between performance and readability.
No. At least not in the UK where climate-related disclosure regulation now occupies a central position in company law. A content analysis of 60 British fossil fuel producers reveals little or no effect on the drive to integrate ecological imperatives into corporate decision-making processes.
Yes. A Georgia State University study finds firms reporting good news are rewarded with lower stock price volatility and better liquidity after the disclosure. For their part, hurricane-affected firms can attenuate negative investor reactions by burying the qualitative news in the body of their disclosures. But researchers warn that quantifying the damages with a dollar amount negates the effect.
Maybe. Research shows investors are more likely to invest in sustainable funds when sad and depressed. ‘This is arguably due to a greater risk aversion pushing investors to favor sustainable investments that they perceive as less risky,’ writes study author Alexandre Garel, associate professor of finance at Audencia Business School.
No. An international team of researchers finds that, across seven ratings providers, ESG, social and human rights scores have hardly any connection with the speed with which firms have withdrawn their operations from Russia. Study authors conclude: ‘When socially responsible businesses face a real ESG test, social responsibility – as inferred from ESG ratings – turns out to be illusory.’
10 percent: investigators say the reduction is greatest for firms with more soft information, ‘consistent with investors leveraging an information mosaic’.
Elaboration: analysts crave ‘color’. A Swiss study finds 28 percent of analyst questions are requests for elaboration or, as researchers call them, ‘the softest of softballs’.
22.4 percent, up from 6.4 percent in 2016. A University of Colorado investigation reveals CEO podcast appearance days and the next five trading days have significantly higher trading volume and absolute abnormal returns than non-CEO-podcast days.
New York. Taiwanese scientists have uncovered an ‘economically significant’ link between investor linguistic diversity and market reactions to earnings announcements. In short, the more investor languages, the stronger the reaction.
Bonus point 1: Name one reason investors might listen to and trade on podcasts, an untimely and non-Reg FD designated medium? Hint: It has to do with the formation of ‘para-social relationships’, an intimate, personalized experience connecting listeners to the media personae and content better than any other channel. (See The Ticker podcast.)
Bonus point 2: Name one reason managers might want to appear on podcasts. Hint: It has to do with reputation and visibility. Research shows CEO Wikipedia page views are significantly higher on and following podcast days. And the effect is larger for the CEO than the firm, even though both receive increased attention.
Are investors listening? An examination of CEO podcast appearances 2022The solid blue line represents all podcasts
Source: University of Colorado Boulder
1-8: Well, at least now you know more
9-11: If only you’d attended that IR Magazine Think Tank…
12-14: Gold medal. You are an IR savant
