CHAPTER 3 – IMPLEMENTING BEST PRACTICES IN INVESTOR RELATIONS Investor Relations (IR) is defined as a strategic management responsibility needed for publicly-traded corporations. IR also integrates finance, communication, and promoting law compliance. Other than that, IR allows effective two-way communication between an organization, its shareholders and also the monetary community. It is a form of marketing which contributes to achieving fair valuation for the corporation. IR appears in many forms, such as meetings with investors, annual reports, company news-releases, and websites. Each communication tools that corporations utilize are designed to tell shareholders concerning the company, so they will gain a bigger understanding about …show more content…
In order to get the best shareholders, company needs to have an intelligent targeting strategy. Intelligent targeting is when the company has to master on how to target the investors in the most effective way to invest into the shares. According to Anne Guimard (2008) in her book entitled “Investor Relations: Principles and International Best Practices of Financial Communication” using the “Seed, Harvest and Lock” approach to IR is another approach to attract and retain shareholders. In the seeding phase, the Investor Relations Officer (IRO) will contact investors who have been identified as potential buyers of the company’s shares. Once the IRO successfully convinced them, it will be the time to “harvest”. Lastly, the third phase which is the “lock” phase, the initial ownership is converted into a larger …show more content…
Financial calendar is important for a corporation to stick with legal deadlines for the disclosure of the financial information which includes quarterly, interim and full-year revenue and earnings announcements as well as the annual general shareholders meetings (AGM). According to Kelly, in her article titled “Time It Right: The Importance of Financial Calendars”, she mentioned that one of the reason why companies use the calendar is to avoid scheduling clash with their important events. The calendar is essential in predicting workload, keeping to a schedule and keeping everyone up-to-date and informed. In this chapter, there are four (4) items to be concerned in this part which are the people who prepares the financial calendar, the financial calendar content, publication of the financial calendar and the quiet periods. Moving to the first point, who is responsible to prepare the financial calendar? Different players must be involved in this process which includes internal legal department, financial reporting and consolidation, operations division managers, corporate communications and the chief of staff, who is the president or the CEO. For the financial calendar content itself, must include sales and earnings announcements and holding the AGM. Next item is about the publication of the financial calendar. Annual financial calendar has to be posted in an easy-to-find manner in the company’s website. Some
The Securities and Exchange Commission requires that publicly owned businesses provide annual reports, which are available to the public. Many different people use annual reports, to make informed business decisions. Management from the company uses the information to determine a number of items. Some of these items are the profitability of the company, the inventory turnover rate, and the accounts receivables rate. Creditors use the annual report to determine how well a company can satisfy its current liabilities, as well as, how the company is doing in the aspect of long tem survival. Another group of people who use the annual reports furnished by companies are the investors, who can purchase shares of stock from the publicly company. Annual reports are very important to these people, because they are an over all picture to help them determine the over all stability and reliability of the company’s financial outlook. These annual reports are important because they do not only contain the financial statements of the company, but there is a management ‘s note to discuss reasons for any unexpected numbers, and an auditor’s report, from an independent accounting firm, who either agrees or disagrees with the financial numbers. Market reporter Matt Krant said, “Ignoring these reports is akin to driving down the freeway blindfolded.”
The annual report or 10-K of a company is a useful source of information for many agents outside of the corporation. Shareholder’s can view the contents of an annual report to get a more comprehensive idea of what the company is built upon. Additionally, annual reports show a company’s progress over the past financial periods and give a detailed breakdown of company investing and operations. The 10-K and all related documents are easily accessible on a company’s website for the public to view. i
Stockholders of the company also referred to as shareholders are stakeholders in the company that are considered owners. In most companies once each year, they vote for who will be on the Board of Directors of the company. In turn, the Board of Directors selects the senior management of the company who would run the day-to-day operations for the firm. As decisions of the senior managers in the daily operation that either makes a company profitable or run at a loss. If the results are not to the shareholders liking, they can vote out members of the Board of Directors tool in turn bring on new members of senior management. Some items the Board of Directors would vote on include the issuance of new shares of common stock; they may and also
Shareholders are the owners of the company. Time and again, they may have to take decisions whether they have to continue with the holdings of the company's share or sell them out. The financial statement analysis is important as it provides meaningful information to the shareholders in taking such decisions.
This study assessed that an effective ratio with near optimal interpretation results in feasible investment decisions, corporate solvency and profit potential and a track down impact on economic growth .The basic objective of financial statements is simply to supply relevant and decision helpful information and facts to individuals who considered necessary such information in a manner competent to satisfy their aims as well as such objectives need to drive the method of measurement. Accounting information need to always point to making sure that users of the information receive the absolute minimum level of information and facts that is related and useful, reliable,
According to the conceptual framework, the potential users of financial statements are investors, creditors, suppliers, employees, customers, governments and agencies, and the general public (Financial Accounting Standards Board, 2006). The primary users are investors, creditors, and those who advise them. It goes on to define the criteria that make up each potential user, as well as, the limitations of financial reporting. The FASB explicitly states that financial reporting is “but one source of information needed by those who make investment, credit, and similar resource allocation decisions. Users also need to consider pertinent information from other sources, and be aware of the characteristics and limitations of the information in them” (Financial Accounting Standards Board, 2006). With this in mind, it is still particularly difficult to determine whom the financials should be catered towards and what level of prudence is necessary for quality judgment.
The shareholders of Event Planners Ltd; a business specialised in planning events such as birthdays, weddings, etc., are disturbed regarding the unprofitable state of the business and the cash flow problem the business faces in recent times. This report discusses the importance of cash and profit for business survival, outlines how the problem of cash flow arises, effects of cash flow problems for the business, and identifies methods for dealing with cash flow problems. It gathered and applied information from several sources such as academic articles, reports, and documents, assumed to be credible enough for the discussions.
A spate of shattering corporate collapses, particularly among large listed companies despite their annual reports and accounts have raised numerous issues in corporate governance. The corporate meteoric rise and fall was associated with serious deficiencies in its corporate governance, including weaknesses in internal control, financial reporting, audit quality, board’s scrutiny of management. The collapse of a number of businesses have several important lessons on the role of corporate governance in preventing corporate collapse with the subject of increasing regulatory measure. Considering this, on 30 June 2010, a revised version of corporate governance principles and recommendations with 2010 amendments was issued to provide guidance to companies & investors on best practice of corporate governance and to increase the transparency of a listed company. These principles are not strictly binding “hybrid regulation” but generally entail some form of sanction if they are not followed the approach of the ASX is an ‘if not, why not’ approach where companies are asked to (1) detail whether they comply with each best practice recommendation and (2) explain why they do not comply if this is the case.
The topic offers a brief discussion on investment banking and its relationship with the research division. Investment banking acts as an intermediary between investors and corporate issuance firms during initial public offerings (IPO’s). It also performs various functions such as aiding firms in mergers and acquisitions. In addition, investment banking relies heavily on information regarding market intelligence. This necessitates the importance of a research department that performs the duty of carrying out research on the market conditions. However, there is a conflict of interest since investment banking relies on this research to capitalize their gains. As a result, the Global Research Analyst Settlement found it necessary to formalize separation of these two departments in order to prevent exchange of information (Morrison and Foerster 2).
Previous researchers have shown that there is a positive relationship between cooperation and satisfaction (e.g. Mallen, 1963; Dwyer, 1980; Schmitz Whipple and Gentry, 2000). The cooperative efforts of channel members should results in greater trust, commitment, channel efficiency and the achievement goals, thus leading to higher levels of satisfaction. (Jonsson and Zineldin, 2003).
Stakeholders and stockholders are a group of individuals that can affect the company and also are affected by the company. In order to be a successful company needs to maintain their investor’s confidence. Stockholders are also able to develop value for the customer because they invest on ideas that will produce success for the company. Stakeholders are all the individuals that have an interest in the company such as employees, customers, and the surrounding community.
1. Corporate Law for Ontario Business (2012). Farah Jamal Karmali 2. Business Dictionary (2010). http://www.businessdictionary.com/definition/separate-legal-entity.html
Accounting aids the government and organisations in decision making for their financial stability. This numerical data helps solve real life problems and contributes to how the economy and businesses perform.
Corporate governance is the set of guidelines that determines the control and organization of a particular company. The company’s board of directors is in charge of approving and reviewing changes to this set of formally established guidelines. Companies have to keep in mind the interests of multiple stakeholders, parties who have an interest in the company. Some of these stakeholders include customers, shareholders, management, and suppliers. Corporate governance’s focus is concentrated on the rights and obligations of three stakeholder groups in particular: the board of directors, management, and shareholders. Corporate governance determines how power is split between these three stakeholders. A company’s board of directors is the main stakeholder that influences the corporate governance of a company (Corporate Governance).
Media and the general public are also interested in financial statements for a variety of reasons.