A 20% increase in press coverage reduces the average cost of a trade by $1.07. This was one of the fascinating conclusions in a recent study by Dr. Eugene Soltes.
The study, entitled “News Dissemination and the Impact of the Business Press” carries great interest for IR practitioners who challenge the often held attitude that investors are merely machines who are convinced exclusively by numbers, not swayed by something as PR-like as a press release.
Those of us who work on the frontlines of investor relations, practical experience tells us that this is simply not true. To be sure, we need to be acutely aware that we are communicating with a knowledgeable audience not readily swayed by buzz-words and other typical marketing tools. We take this into account by writing fair and accurate IR products designed to inform the reader. On the other hand, they are people, and as such they do form an image of your company based on what you communicate with them, beyond the impact of the financial figures.
There are two conclusions to be reached here:
- When you have something of interest to investors, communicate it. This keeps investors informed, and shows that your company has an active IR department that investors can depend on to always keep them up to date.
- Add non-financial information to your press releases. Investors want to know your take on news and developments. Relate facts and figures to your investment case, and take great care to include it in the boiler plate statement at the end.
