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May 02, 2022

Investors express importance of live remarks in earnings calls in new research

IR Magazine report shows clear investor preference for live over pre-recorded prepared comments

More than seven in 10 investors believe it is important for prepared remarks to be given live during earnings calls and not be pre-recorded, according to the latest research report from IR Magazine. This includes more than a third of investors that view this as very important, while fewer than two in 10 see live remarks as either slightly or not at all important.

The report on earnings calls, which features in the spring issue of IR Magazine shows that a quarter of companies globally pre-record prepared remarks for calls. This is most common in North America where just under three in 10 companies engage in the practice, and least common in Asia where 17 percent pre-record their remarks to investors.

The most commonly given reason for pre-recording remarks is that it reduces stress and is one less thing to be concerned about on the day of the call. Done right, it can lead to a more relaxed presentation. As one North American IRO comments in the study: ‘Not all of our executives like to follow a script, so pre-recording lets them speak genuinely and off the cuff, while still allowing us the time to edit.’

The pre-recording of prepared remarks for earnings calls appears to be a trend that has developed during the Covid-19 pandemic. As calls have switched to a virtual format, it has made more logistical sense to record the remarks beforehand because that has less impact on the experience of the audience. One European IRO refers to pre-recording remarks as ‘a luxury that virtual presentation has enabled’ while another called it a ‘Covid trend that will persist post-Covid’.

But with three quarters of companies not pre-recording their remarks, it appears most IROs and managers reflect investors’ preference for live presentation. In explaining this, IROs often refer to time constraints and the fact that presentations have to be up to the minute. Many managers also prefer the spontaneity of live remarks – ‘I want to [pre-record] but the CEO prefers making game-day remarks,’ notes one North American IRO.

North American trend revealed

Among the investment community, the buy side is less concerned than the sell side about live remarks. More than three quarters of sell-side respondents to the study view live remarks as important, with four in 10 viewing them as very important. Despite being relatively less concerned, 63 percent of the buy side still say live remarks are important, with just under three in 10 saying they are very important.

How investors feel regionally about live remarks matches the trend for pre-recording. In Asia, where companies are less likely to pre-record remarks, more than eight in 10 investors say live remarks are important, including 43 percent that say they are very important.

North American investors, on the other hand, are considerably less concerned about whether or not remarks are live. In fact, a minority of 47 percent think live remarks are important, compared with 37 percent that consider them only slightly or not at all important.

While there is a difference globally of more than 50 percentage points between investors that view live remarks as important and those that don’t, this falls to just 10 percentage points among North American investors. This gives an opportunity for the trend in pre-recording prepared remarks in North America to continue post-pandemic.

The IR Magazine Earnings Calls report is based on a study of IR professionals and the investment community conducted in Q4 2021 and Q1 2022. Click here to download the report.