Nearly two years after the SEC issued guidance on use of company websites for disclosure, a survey of investor relations professionals by the National Investor Relations Institute (NIRI) reports few have changed their web disclosure practices.
In August 2008 the SEC – before the near-meltdown of our entire financial system captured its full attention – issued an interpretive release on use of web-based media to fulfill Regulation FD disclosure responsibilities. (Read SEC guidance here.)
The essence of the SEC guidance, carrying out then-Chairman Chris Cox’s agenda to bring disclosure methods into the 21st Century, was to let companies know they can establish their websites as the place for investors to find material news. That set off speculation (and some advocacy) that companies would stop issuing press releases and possibly abandon other channels of disclosure. It hasn’t happened.
According to NIRI’s survey of about 200 senior IR people, 93% have not changed the role of their websites – and only 7% have – since the SEC guidance. NIRI adds, “the 7% who did make changes … are using more channels, not fewer.”
To be sure, more companies are encouraging investors to visit their websites – building the email alert lists through the sites, putting the web address on all materials, issuing advisory releases to direct people to the sites, and the like.
About 90% of the respondents file 8-Ks and issue news releases through paid wire services to get material news out to the market. (The IROs reported median annual cost of $25,000 for issuing press releases.) After those two channels come conference calls, email alerts, RSS feeds and social media.
A few companies are pushing the envelope. Google created ripples in the IR community by reporting Q1 earnings on its IR website in April – and not providing a detailed release through a newswire. A 3-sentence alert through a newswire did point market participants to the website posting:
Google Inc. (NASDAQ: GOOG) has released its first quarter 2010 financial results. Please visit Google’s investor relations website at http://investor.google.com to view the earnings release. Google intends to make future announcements regarding its financial performance exclusively through its investor relations website.
Google’s move stirred some controversy. Reuters clucked that this “unorthodox” approach “raises questions.” Dominic Jones of IR Web Report sprang to GOOG’s defense and went after Reuters. I’ve heard other IR people give varying opinions.
My feeling? Google can do whatever it wants, of course. I view company news more from a communication standpoint than a legal one. For most companies, the goal should be to reach as many investors and other stakeholders as possible with earnings or another announcement. I would add channels, not cut them off.
At this stage, having your press release feed automatically into Bloomberg screens, Yahoo! Finance and all those other channels (even Google search) seems desirable. Transparency includes making it easy to find your information. Requiring an investor to visit your website, adding clicks to the process, or pushing more people to read news filtered through reporters for Reuters or Bloomberg, seems limiting.
I’m all for robust websites. As I’ve said before (see “The website: your front door”), IROs should view a company site as the potential investor’s entry point to engage the business. We should evaluate the experience a person has approaching that front door – and benchmark how we do providing information, creating impressions and inviting interaction. Ease of use and transparency should characterize a website. But the site isn’t the only channel.
What’s your opinion on the place of websites in good disclosure? Comment below.