Buy and sell side wound up about guidance shortcomings

Jun 14, 2010
<p>Respondents to <i>IR magazine</i>&lsquo;s European investor perception study get some issues off their chests</p>

IR magazine’s investor perception studies are always a chance for investors to let off some steam, and this year is no exception. Nearly 1,000 members of the buy side and sell side were quizzed for this year’s European study, the research that determines the winners and nominees at the IR Magazine Europe Awards, held at the end of June in London.

The survey asked respondents whether companies are providing more guidance and access to management post-financial crisis. Investors and sell-side analysts were ambivalent about the current quality of disclosure. Some even took issue with the implication that the worst was actually over. ‘The worst over – are you joking? We’re not even halfway through and no, transparency is not improving,’ said one Swiss sell-sider.

More than half of respondents (54 percent) felt companies were not providing more information or access than before the crisis, with around 30 percent saying companies’ communications had improved over the past year. Many respondents expressed concern about the continuing lack of guidance; some acknowledged the need for caution but many felt companies were using the economic situation as something to hide behind.

‘Uncertainty has meant companies withhold outlook; comment and disclosure has definitely fallen off in the last few months,’ one respondent told researchers. ‘I see absolutely no improvement in transparency. Some companies won’t give us certain spending figures – it’s completely stupid,’ commented a frustrated French buy-side analyst.

Many of the respondents who believed communications had not changed since the crisis were based in central and eastern Europe. Of the 30 percent who said corporate communications had improved over the past year, several added that the improvement was decidedly slight. Some said that although guidance was still poor there had been an increase in transparency.

There was a mixed response to the question of whether there is now better access to management. ‘Top-level management is providing less guidance – it is not commenting on expectations because it is too unsure where things are going,’ said one buy-side analyst from the UK.

Dutch details
In 2009, companies from the Netherlands received the highest number of top nominations – 13 – resulting in six awards, including the grand prix for best overall IR in both the small to mid-cap and the large-cap categories.

This year’s survey asked respondents for their suggestions as to why IR at Dutch companies was deemed to be better than other countries’ IR in last year’s survey. One hundred respondents, who are involved with companies in the Netherlands, were asked for their views.

Around half (49 percent), expressed positive reasons for Dutch companies’ superior IR performance. Exactly a quarter (25 percent) did not think companies from the Netherlands were any better at IR than those in other countries. The remaining 26 percent had no view as to why Dutch companies’ IR should have been deemed better than that of companies in other countries in last year’s research.

UK companies received the most award nominations this year, gaining 33 top mentions, followed by 27 for German companies. Last year’s highest scorers – the Dutch – this year fell to third place, securing a total of 11 top nominations.

The best of the best: countries and nominations
UK: 33
Germany: 27
Netherlands: 11
Switzerland: 8
France: 7
Portugal: 6
Spain: 5
Ireland: 4
Denmark: 3

Source: Investor Perception Study, Europe 2010

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