US buy-side investors say intangible factors impact investment decisions
Non-financial factors – or ‘intangible factors’ – wield considerable influence over investor perceptions of a company and their ultimate investment decisions, according to a new survey.
A majority of buy-side investors (80 percent) report that their firm assigns ‘a lot’ or ‘some’ weight to a range of intangible factors when making an investment decision. Only 19 percent assign little or no weight to intangible factors.
‘Report from the buy side: The power of intangible factors on investment decisions’ from PR firm Weber Shandwick also reveals that half of investors (51 percent) say their firm has a methodology in place for assessing the value of non-financials, and investors pay extra attention to CEO actions during times of financial difficulty.
The study finds that investors consider their personal interactions with the C-suite to be critical in making investment decisions. Investors would like to interact with senior management on average seven times per year, whether by email (3.1 times per year), by phone (2.6 times) or in person (1.3 times).
As expected, investors pay extra attention to CEO actions during times of financial difficulty (78 percent), strategic investments or transactions (77 percent), public image crises (75 percent) and government scrutiny (75 percent).
Liz Cohen, head of financial communications at Weber Shandwick, comments in a statement accompanying the study: ‘As capital markets, investor sentiment and the political environment evolve at faster and faster rates, publicly traded companies need to regularly reassess their communications – both the messaging and the strategy – to provide investors with continued confidence in the company’s strategy and growth potential.
‘Understanding which factors, outlets and communications most influence investors’ perceptions can have a meaningful impact on valuation. A proactive approach to financial communications is more important than ever.’
The report was conducted with KRC Research and surveyed 104 US buy-side investors at financial organizations with more than $500 mn of assets under management.
Based on the research findings, Weber Shandwick recommends the following strategies to companies and communicators looking to more effectively engage with the investment community:
– Don’t overlook your intangible assets
– Make CEOs and other senior leaders personally available
– Ensure intangible assets are easy to identify on public-facing channels
– Don’t ignore social media. Keep an active and fresh presence there
– Build a strategic engagement plan for the CEO and ensure he/she is media-ready
– Be in lockstep with the government relations team. Regulatory changes or policy decisions are among top issues that are influential in investment decisions with the new US presidential administration.