Posts Tagged ‘IR 2.0 – Web & social media’

XBRL really is coming our way

December 18, 2008

The Securities and Exchange Commission has now adopted a three-year timetable, starting mid-2009, for requiring companies and mutual funds to file disclosures using the eXtensible Business Reporting Language (XBRL).

coxvideo-121708SEC Chairman Christopher Cox has made XBRL a top priority – and spearheaded getting the final rules approved before leaving office in January. A video of the announcement by Cox on Dec. 17 explains the benefits. The interactive data format electronically tags hundreds of line items and topics in company filings. XBRL will allow automated data mining by investors (or anyone else) with tech skills to rapidly compare companies and industries, analyze changes over time, and search for discrepancies or financial data overlooked by people in the marketplace.

Originally, XBRL was about bringing disclosure and investment analysis into the interactive age through 21st Century technologies. Now Cox ties the need for change to recent financial collapses and scandals, which he blames partly on lack of accessible information. He says XBRL will help: 

Data disclosure will make the markets far more fair for honest participants … Unlike document disclosure, data disclosure helps analysts, financial journalists and regulators find red flags. And it makes it easier to detect missing information. This is because data analysis is faster, cheaper and more accurate than document analysis.

(I’m a big believer in the critical role of information in assessing value and risks. But Cox seems to overreach when he claims XBRL will help restore confidence in markets, prevent financial frauds and even avert formation of future asset bubbles. His emphasis on XBRL as an enforcement tool is interesting, though – this is new, like data mining to detect flu outbreaks.)

Cox’s earlier plan (see June 18 post) would have “gone live” with XBRL at the start of ’09, but the SEC took mercy on finance staffs – and investors – scrambling just to survive in ’08. The final timetable:

  • About 500 largest US and foreign companies ($5+ billion in float) will start filing XBRL-coded reports with the first 10-Q after June 15, 2009.
  • All other “accelerated filers” must start filing after June 15, 2010. 
  • And all other companies must start filing with XBRL after June 15, 2011.

So XBRL really is coming our way. Companies can get ready by (1) studying up, starting at a site like XBRL.US, (2) consulting legal counsel and CPAs about the requirements, and (3) investigating vendors for XBRL tagging services. No doubt, the vendors will be calling you. Whether the actual work of implementing XBRL falls to IR, Accounting or Legal, investor relations professionals need to help their companies prepare.

We should also consider how data mining will affect the capital market’s view of our companies: What kind of data will XBRL users seek to compare, within or across industries? How will that reflect on our companies? Does the tagging process, as it is implemented, accurately capture our unique features or issues? Can we expect a different type of investor to become interested in our companies, or will they ask different questions?

It’s coming.


Corporate blogging: A personal touch

December 3, 2008

The switch that unleashes the power of communication is making it personal – and this applies to corporate websites, blogs and social media – author and communications prof David Perlmutter says.

Perlmutter studies and blogs on political communication and wrote Blog Wars: The New Political Battleground, which came out early in 2008 chronicling, among other things, the superior online presence of Barack Obama’s campaign for President. I went to Perlmutter’s lecture on business blogging today at the suburban Kansas City campus of the University of Kansas (where he teaches).

The mark of a great communicator, Perlmutter says, is that a member of the audience comes away saying, “I felt like he was talking to me personally.” Without the human connection, talk is just noise. So it is with corporate forays into interactive media, Perlmutter says. The goal is mass communication, but the voice must be personal.

“I have seen a lot of corporate blogs and, boy, they read like corporate blogs,” Perlmutter says. “This is something that big institutions have trouble figuring out how to do.” Finding the right voice will be different for every company, but it will certainly take some thought.

The professor also hit one of my favorite themes: Companies shouldn’t leap into blogging, Twittering or using other media without first figuring out how those tools serve their business purposes. A blog, for example, demands time and resources – someone to maintain relationships by posting fresh material, responding to comments and implementing new ideas. So, Perlmutter says, “The first decision you need to make is, what is it actually trying to accomplish?”

For investor relations people looking at what I call IR 2.0, strategic thinking is a critical first step.

Annual reports: not extinct yet

October 29, 2008

Annual reports are evolving – but not extinct – as a primary tool for telling a company’s story, according to a survey released this week by the National Investor Relations Institute (NIRI). Of the 182 companies responding, 91% produce annual reports, although the clear trend compared to past years is toward spending less on printed copies and more for online versions.

My comments on a few top-line results from those who do annuals:

… The 10-K wrap is most popular (53%), followed by traditional (35%) and summary (12%) reports. When you ask professional investors about the annual, they always claim to head straight for the MD&A and other meaty sections of the 10-K. The wrap adds the personal touch of a CEO letter or narrative, and perhaps visual elements, to drive home the key messages.

… Print budgets for annual reports are coming down. The number of copies is dropping as companies use the Notice and Access process to reduce the number of mailed books (35% now print less than 10,000). The shift toward 10-K wraps and summary reports also is cutting print costs.

… Online annual report budgets are rising, though some designers include digital versions in the print bid. Just posting a plain PDF to the website isn’t keeping up with the way people like to read online. If you haven’t already done so, you should look into offering user-friendly features like an interactive  HTML-based report, hyperlinks, an online index or financial tables downloadable into spreadsheets.

… On average, companies start the annual report process 3-1/2 months before year end. So if you’re on a calendar year, you should be more than a month into planning, creating messages and developing designs.

NIRI’s survey is a good resource for benchmarking your annual report practices, including a reality check on budgets. If you’re a NIRI member, access the “Executive Alert” from the NIRI home page or the full survey report here. If you’re not a NIRI member, sign up now – or you can buy the “Executive Alert” here.