The so-called financial public relations refers to a series of public relations promotion activities carried out by enterprises (mainly listed companies) in order to seek and maintain their specific image and value orientation in the eyes of investors in the capital market and those who have important influence on investors, so as to enhance investors' confidence in holding shares and make their stock prices match the real value of listed companies.
The concept of "financial public relations" is being accepted by more and more enterprises in China, especially those listed on GEM. In an era when attention and capital are highly competitive and changing hands, they need to strengthen financial public relations more than any previous listed sector-the scientific and technological content of high-tech enterprises is not easy to be understood by the market, and it is necessary to strengthen the dissemination of their industry background, scientific and technological knowledge and market application value; The popularity of listed companies on GEM is generally low, so it is necessary to strengthen their brand awareness and reputation awareness in the market.
In today's developed capital markets such as Europe and America, "financial public relations" has long been deeply rooted in the hearts of the people, and it is called investor relations consultant in the United States. The so-called financial public relations refers to a series of public relations promotion activities carried out by enterprises (mainly listed companies) in order to seek and maintain their specific image and value orientation in the eyes of investors in the capital market and those who have important influence on investors, so as to enhance investors' confidence in holding shares and make their stock prices match the real value of listed companies.
With the further improvement of the capital market mechanism, the demand for enterprise financing, mergers and acquisitions, market value management and so on is increasing. There is bound to be a huge demand for investor relations and financial public relations, which will usher in the great development of this industry. [ 1]?
The Influence of Investor Relations on the Company
Headquartered in Buffalo, new york, Aerospace Company specializes in providing professional lighting products for civil and military aircraft. At the beginning of 2003, when the company's top management prepared to spin off the printing and packaging department and set up MOD-PAC company, it almost ignored an important role-Fidelity Investment Company, the company's largest institutional investor. If Fidelity is not optimistic about the spin-off and throws a large number of shares, then the share price of this small company (market value: 55 million US dollars) and its spin-off company will suffer a devastating blow.
Deborah K. Paroski is an experienced financial public relations consultant. She was appointed as the financial public relations staff after the split. She quickly arranged a meeting between the company's top management and Fidelity's portfolio manager. This is the 1 meeting with the management of the fund company. She has also done a lot of other work, including ensuring that the split shares of MOD-PAC will have a market prospect.
Finally, Fidelity Investment did not withdraw its capital, and MOD-PAC's share price was listed at more than $5, which ensured that it could be traded in the broader Nasdaq national market instead of the small Nasdaq capital market. When Fidelity sold the stock of MOD-PAC, the company's share price rose to 15 US dollars, while the share price of Aerospace Company exceeded 7 US dollars, reaching the highest point in 52 weeks. This is also in line with the expectations of all parties for the spin-off and has received results.
Brian J. Bush, a professor of accounting at Wharton Business School, and Gregory S. Miller, a professor of accounting at Harvard Business School, believe that this case is typical, especially for small and medium-sized companies listed on Nasdaq or OTC market. The two experts recently co-wrote a paper entitled "Investor Relations: Risk Exposure of Companies and Follow-up Action of Investors". This paper studies the influence of investor relations on the market performance of small companies.
"We found that these companies have greatly improved their information disclosure (financial information and other corporate behaviors) after hiring financial public relations companies, and also made great progress in media reports, trading activities, institutional investors' shareholding, analysts' follow-up research and market value. This progress is not only reflected in the absolute value, but also in the conclusion reached after horizontal comparison with the exchange market, industry, time to market and the follow-up degree of old shareholders. " The author wrote.
Attract the attention of analysts
Even in the best case, most small companies still need to make considerable efforts to enter the sight of potential investors. Bush and Miller believe that for these small companies, the stricter supervision triggered by a series of corporate scandals makes financial public relations more important than before. These companies-most of them can't afford to hire someone to be in charge of investor relations internally-so they should seek help from professional financial public relations consultants, hoping that they can help companies "formulate more complicated information release processes" to cope with new regulations such as the Fair Information Disclosure Rules.
Listed companies should also be more vigilant than before. They should pay attention not only to what they tell investors, but also to the way they disclose information. A slight negligence will violate some terms. The survey report pointed out: "It is generally believed that these two bills have weakened analysts' interest in SMEs, which makes it even more necessary to find appropriate ways to attract attention. "
Because of the conflict of interest, analysts of Wall Street securities companies who used to follow small companies and hope to get some investment banking business can no longer do so. Therefore, companies should not pay special attention to some analysts when releasing company information. The end result is that it is difficult for small companies to win the attention of analysts.
Many small companies hope to stand out from the noise of many similar companies and let investors hear their voices. For them, the importance of professionals engaged in financial public relations has doubled.
What exactly does a good financial public relations company do? "First, it works closely with client companies to help customers perfect the stories they want to tell analysts and investors." Bush said. This also includes persuading the company's management to provide additional and more complete information disclosure, whether financial information or non-financial information, which exceeds the requirements of the SEC. For example, it can provide the details of reaching a long-term agreement with customers, or the details of drug trials entering a new stage.
Financial public relations companies also arrange for the management of client companies to meet with large institutional investors (or "buyers") as well as analysts and securities companies (or "sellers"). The purpose of the meeting is to make the buyers and sellers of stocks familiar with and like the management team of the company. Bush added, "You can't use the P/E ratio model to measure their value, but depends on whether the management has good ideas and excellent business plans, and whether the company is taking correct measures to make it profitable. Investors are largely betting on management, not financial data. "
From this perspective, reputable financial public relations people generally do not accept companies that only pursue short-term stock price increases as customers. "Almost all financial public relations people said that they were very worried that this situation would eventually lead them to be inadvertently involved in a conspiracy of' speculating high and then selling'," Bush stressed. In the scheme of "speculation before selling", companies that lose their moral standards will deliberately speculate on the company's share price in a short time, so that insiders can profit from it.
"You do have a chance to use this method," Bush said. "You hire a financial public relations company and promise to answer all questions from investors and analysts. If you leave once something goes wrong, you will lose these investors and never have a chance again. "
Financial public relations is not a simple advertisement.
Paloschi, a financial public relations consultant who helped the aerospace company survive the spin-off crisis, said that in the consulting company where she works, clients can get 1 set of strategies to manage investor relations, not just skills. "Many companies feel that investors are the same. I told them that there are many individual investors, and your task is to find out what each investor wants to hear. "
In Paroski's view, investor relations include communication, market, finance and law, which are equally important and indispensable. "The company is like a living organism. It will grow, evolve and have a life cycle, so its investor composition is also changing. Management must help investors understand the company's development direction and let them know what will happen to the company's future cash flow. "
She added that the industry has undergone many changes since the 1980s. Financial public relations has been developing and progressing to adapt to the increasing proportion of institutional investors and funds, as well as the requirements of recent regulatory changes for companies. Large investors are becoming more and more mature, and the demand for company data and analysis is increasing. This has also led to selective disclosure and triggered the SEC to formulate new laws and regulations, such as fair information disclosure rules, to regulate the rules of the investment game.
At the same time, the so-called "global solution" promoted by Eliot Spitzer, the attorney general of New York State, also tilted the investor relationship to the buyer. "Under the framework of this solution, Wall Street financial companies paid a fine of $654.38+04 billion because their analysts exaggerated the performance of the companies with which they had investment banking business. They also separate the research department from the investment banking department to avoid being accused of conflicts of interest in the future. "
This also means that smaller companies that had not received much attention suddenly lost the attention of analysts. In the past, if a company wanted to get a little attention from the stock market, it only needed to communicate with a few analysts. But now they must communicate directly with potential investors. This task is time-consuming and expensive-if you want to hire a good financial public relations company, small companies usually pay $60,000 to $65,438+$20,000 a year.
Thompson warned: "Although most CEOs will look at their financial pr and say,' I want you to raise the company's share price.' However, the task of financial public relations is not only to raise the stock price. You must never get on this hook. Your job is to spread the company's information fairly, whether it is good news or bad news. Then, the market will determine the value of the company in the stock market. "
Bush warned that financial public relations is not a simple advertisement. When hiring a financial public relations company, the management of the company is actually making a long-term and arduous commitment to investors, including letting investors know more about company management and information disclosure. "It's not like you hired someone to raise the stock price, and then someone bought it."
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