NZ investor relations ok but could do better

By Phil Boeyen, ShareChat Business News Editor

Tuesday 2nd April 2002

New Zealand listed companies have been given the thumbs up for their annual reports but have plenty of scope to improve their investor relations strategies according to a new study.

The study by Dr Andrew Godfrey of the Manukau Institute of Technology's business school questioned 16 listed companies and 16 members of the New Zealand financial community, including analysts, fund managers, media and financial advisors.

In his findings Dr Godfrey says there is good recognition of the importance of investor relations (IR) by companies but while CEOs are active in their support, boards "are less obviously so".

The study also found that while analysts and fund managers believed the larger New Zealand companies are providing generally satisfactory investor relations, the financial media and adviser groups are more critical.

The financial community also generally believed that small shareholders were not well served by the companies.

Listed companies did score well on traditional forms of investor communications, such as annual reports, which were described as valuable and "overall are quite well done in New Zealand." One-to-one meetings and company presentations were also rated as consistently valuable.

However there were plenty of areas where the financial community thought companies could improve, including doing a better job at annual general meetings and by making better use of information technology to communicate with the market and the financial community generally.

The use of outside consultants such as public relations companies to pass on information also came in for some flak.

"The internal structure and organisation of IR is important in order to ensure effective IR information flows and relationships with the financial community. Consultants may not contribute to effective IR if they act as barriers to these information flows and relationships," Dr Godfrey says.

The study also showed that while companies claimed to seek IR feedback there was little evidence of this from the financial community's perspective.

Publication of the New Zealand study follows a similar one reported in The Australian recently which found that despite increased shareholder activism many companies and fund managers believe small shareholders and their representatives lack the organisation and resources to be effective.

"Major companies are driven to communicate and engage with retail investors and activists such as the Australian Shareholders' Association "out of necessity to protect their reputations", not because the concerns are valid or credible," the newspaper reported.

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