Publicly quoted companies that enhance the level of disclosure in their annual reports can improve management credibility and increase the number of long-term investors, a conference in Dublin has been told.
Speaking at IR Magazine’s conference and awards for investor relations professionals in Dublin yesterday, Mr Ronan Murphy, head of audit at Pricewaterhouse-Coopers, said that research has shown that greater transparency in corporate communications will help to ensure that companies are properly valued by the capital markets.
“With limited capital available, those companies which provide more corporate information alongside financial information, are likely to attract that capital,” he said. Companies that provide information that goes beyond statutory requirements can enhance shareholder value and have a positive impact on business, Mr Murphy said.
PwC and the US investment house, Schroders conducted an examination of Coloplast, a Danish company which is recognised as a leading business in its presentation of corporate performance.
The examination tested the benefits of greater disclosure in annual reports. Its annual report was edited back to contain the amount of information required under law and given to a group of analysts to evaluate. Another group separately looked at the original report.
The group that had Coloplast’s edited annual report produced higher earnings and revenue forecasts, but put a sell recommendation on the stock. Those with the unabridged version produced lower forecasts but overwhelmingly issued a buy recommendation on the shares.
“The above experiment demonstrates the positive benefit to stakeholders and to business of providing a more comprehensive picture of corporate performance,” he told the conference. Mr Murphy said Irish companies continue to lag Continental European countries in terms of the level of disclosure in communications with their shareholders.
Anglo Irish Bank won the Grand Prix award for best overall investor relations. Jurys Doyle hotel group won the award for the best small and mid-sized capitalised company. Mr Barry Walsh of Irish Life & Permanent was named as the best investor relations officer. Anglo Irish Bank’s chief executive, Mr Seán Fitzpatrick, won the best investor relations by a chief executive or chief financial officer award.
Bank of Ireland won the category acknowledging the most progress in investor relations. CRH won the best corporate governance award. CRH was also acknowledged as having the best annual report. Anglo Irish Bank was voted as the best company in terms of investor meetings and roadshows, with Bank of Ireland and IAWS highly commended.
