As the use of Twitter in investor relations is picking up, we’ve implemented a small experiment to display real-time searches of IR related tweets.

Visit site: http://twitter.8iris.com

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There is much buzz in the public relations and advertising community about the rapid growth in use of social networking websites like Twitter, Facebook and Myspace. According to a recent survey by Universal McCann, reportedly the most extensive social media study ever undertaken, these media are already the number one stage for content dissemination online.

The lure of these sites is that they are popular with a wide range of users, and they are timely and cost effective. My main issue has to do with accountability and accidental disclosure.

Investor relations practitioners, bloggers and other voices are actively debating whether IR departments should take advantage of these media to communicate with their investors, and they seem to be pretty much split down the middle.

Those acting in an IR capacity are accountable for the material they release in rather a different way many other marketplace communicators. A seemingly insignificant detail on a CEO’s blog or a company’s Myspace page can have a material effect on investors, so caution is wise.

I echo my earlier advice using bulletin boards and chat rooms: Take advantage of the reach and timeliness of social networking sites, but retain the integrity of your official channels: until you’re absolutely comfortable with the workings of these sites, use them primarily to link to material on your website.

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XBRL (eXtensible Business Reporting Language) is a standardized format for sharing financial information. Similar to how the USB plug has made it easier to connect computers to peripherals, XBRL aims at making financial figures easier to access and manipulate. For the end user, this brings a lot of benefits:

1. Figures can be imported directly into the user’s preferred investment software
2. Figures can be easily converted to different formats, making it simpler to compare figures across formats, accounting standards and other obstacles
3. Figures will be more accurate, as the human error caused by manually typing figures across formats is minimized

In short, XBRL makes it easier for investors to play around with your figures. This again should mean a greater reliance on timely, accurate data. This implies two opportunities for IR:

1. An increased need for timely, accurate and extensive financials. As users come to rely more on financial figures in XBRL format, expect even mom-and-pop investors to grow increasingly sophisticated. They’ll expect you to provide them with data both early and often.
2. An increased need to highlight important metrics. As automated models become more common, it becomes even more important for IR to help investors understand the value of the company by pointing out figures that are important for making an investment decision about your company. For example, your annual report can make investors aware of KPIs that are particularly relevant to your company’s success.

The modern IR professional needs to work with XBRL. Ignoring it will move investors toward companies that do fulfill their need. Even more importantly, there is no substitute for intimate knowledge of the importance of certain figures and the qualitative aspects of your company. The winners will be companies that are good at conveying both.

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:

1. 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.
2. 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.

View the study by Dr. Eugene Soltes

Here’s an example of Investor Relations and Twitter in action.

Sun Microsystems uses a combination of technologies to disseminate their IR news. The news items on the SunIR News on Twitter is made possible by using a RSS feed and a service called twitterfeed.com.

Twitter is rapidly becoming a standard part of the IR communications arsenal, but some are skeptical.

In a recent newsletter from IR Global Ratings, Twitter was suggested as not only a legitimate but a necessary communications tool. The writer highlighted main of using Twitter: it can be updated in real time and viewed remotely, by wireless connections or mobile phones, perfect for the IR communications ideals of timeliness and accessibility They go on to mention Twitter’s ability to reach a wider part of the public than conventional disclosure instruments and it’s exponential growth the past months, now potentially reaching more than 5 million users worldwide.

Others are less enthusiastic about Twitter’s potential role as a reliable tool in the future of investor relations, Scott Chaikin, Chairman and CEO of Dix and Eaton recently said in a twitterview with the Examiner.com that he feels “…it’s a good tool to draw attention to but not for disclosures. The format’s too abridged to be practical for one thing. User base not representative enough, and too wild-west-ish (how do I know it’s really from and vetted by GE, IBM, etc?)”.

They both make valid points; Twitter if a fast and easy way for a targeted audience to get your updates in real time, but there’s not enough accountability to trust it with disclosure and as a stand-alone communications tool. I suggest taking advantage while avoiding the pitfalls by using twitter to hyperlink to your more traditional online communications tools. That way, users can be directed to your press releases, or straight to your annual report for that matter, via their laptops or even straight on their mobile phones, while you keep the integrity of the source and avoid the whole wild-west scenario.

Whether or not Twitter will revolutionize the world of investor relations remains to be seen, but if they manage to make it a more reliable tool, it feels like a safe bet that Twitter has a future as more than a tool for attention-starved teens.

Eight Iris is also on Twitter. We can be followed at http://www.twitter.com/8iris

Singaporean institutional investors are willing to pay a quantifiable premium for companies with good investor relations practices, according to a new joint study from the Singapore Management University and the Investor Relations Professionals Association (Singapore) (IRPAS)

The study, published in June 2009, found that 89% of Singaporean institutional investors would pay a quantifiable premium for SGX-listed companies that practiced good IR. A third of those asked quizzed would pay a 10% premium, while almost a quarter would pay a premium higher than 15%.

It was also discovered that most institutional investors rated the current level of Singaporean IR as below those of comparable markets, suggesting that increased efforts in this area would be highly effective in improving the value of SGX companies. It concludes that companies ‘could invest much more in IR than they currently do’, and that closing the gap between IR standards and the expectations of investors could pay handsomely.

The implications of this study is that institutional investors clearly realize the value of good IR and the efforts of the people behind it; the credibility of management and IROs were rated as the most important qualities in a company’s IR.

The complete Institutional Investors’ Assessment of Investor Relations in SGX-Listed Companies’ is available for download in PDF format from IRPAS’ website.

The SMU/IRPAS Joint Study (via IRPAS)

The traditional way for investors to get these figures is either by subscribing to a third party service or by exporting the figures manually from your annual report or IR website.

Multinational personal products manufacturer Colgate-Palmolive makes the process easier by offering the raw numbers in Excel format on their annual reports section. This simple solution means that the data is in a format that should be comfortable for all investors and one that is very easy to play around with or export to whatever software or service the investor prefers. Notice also how the files come complete with footnotes, giving users the context they need to understand the raw data.

Visit Colgate-Palmolive’s annual report page