Don’t you agree that the way Google’s chairman recently announced changes in their top management structure is creative and innovative? Some CEOs and Investor Relations managers might think that this does not suit them. Instead of the widely known and traditional approach of announcing the changes in a press release distributed by paid PR wire services, Eric Schmidt made the announcement on Google’s official corporate blog and with a message on his personal Twitter account, which has more than 230,000 followers.
New ways of disseminating financial disclosure information
This approach is not only innovative and creative. As IR Web Report researched, it’s also in compliance with local regulations, as it should be. In the USA, companies like Google and Microsoft are changing the way they disseminate their financial disclosure information. They are using their own websites instead of PR wire services, or they are using the wire services merely to distribute short advisory releases that link back to the full-text information on their corporate websites.
If replacing paid PR wires for corporate websites as primary channels for price-sensitive information in combination with social media is a growing trend in the USA, will companies elsewhere in the world follow this trend?
Online + social media strategy for financial communication
If research would show that investors, analysts and the media rely on companies’ own website or distribution lists for information, why would companies want to continue to pay for press release wire distribution services? If they would discontinue to pay for the wire services, it would save companies a lot of hassle and money. It would also give companies the push they might need to further develop their online strategies for financial communication, including social media, whereas at the same time still being compliant. You could even argue that it may not even be prudent for companies to continue relying on paid PR wires to meet their obligations.
Local compliance rules are leading
It goes without saying that companies need to comply with local regulations for fair disclosure. In the Netherlands for instance, companies need to issue a press release, using media that can disclose the information instantly and efficiently. As far as I know, in The Netherlands, the Google example would trigger a call from the AFM (Autoriteit Financiële Markten) to request the company to issue a press release instantly (providing the company is listed on the Amsterdam Stock Exchange). Would it help if companies talk to the authorities about the changes we see in the way our financial stakeholders are getting their information? Because if the only reason for companies to use paid wire services would be to comply with the rules, then maybe this year it will be time to challenge the authorities to change the rules.
What’s required to narrow the gap with Google?
In order to be able to follow Google’s example, firstly companies would need to have websites or blogs that are compliant and they would need to meet certain standards. I know from experience that this might still be a challenge in certain public companies and in these cases companies still will want to rely on paid wire services. Companies should also need to be able to demonstrate that investors, analysts and the media are using their companies’ own website or distribution lists to get information.
Do you know of any public companies outside the USA that are following Google’s online and social media strategy for informing the financial markets and what’s your view on this?