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Aug 22, 2010

Retail shareholders shun social media sites

Survey conducted among private investors in Australia and New Zealand

Retail investors are largely ignoring social media sites when they make investment decisions, according to new research from the Australasian Investor Relations Association (AIRA).

The association conducts a two-yearly survey into the use of electronic communication tools by private investors.

This year, just 11 percent of respondents say information on social media sites has influenced their decision to buy or sell shares.

An even smaller number – 7 percent of respondents – say they monitor social media sites for investment purposes.

Listed companies are increasingly using social media channels to connect with their retail shareholder base. In one example last week, Hewlett-Packard incorporated Facebook, Twitter and StockTwits into its results presentation, notes IR Web Report.

But the trend does not appear to be catching on among retail investors in Australia and New Zealand, where the survey was conducted.

In other findings, most respondents make clear they are happy to receive company information via email. Around three quarters (76 percent) say they are happy to receive notice of shareholder meetings and proxy forms exclusively over email, while 73 percent are happy for the annual report to be delivered by email.

There is also a growing demand for companies to use prompt email notification systems. Of the respondents, 28 percent expect to be contacted immediately after a company announcement. A further 32 percent expect a response within the hour. Only 7 percent of respondents expect a response by the next working day.

‘Retail investors have higher expectations of listed entity electronic communications than when we last conducted this survey in 2007,’ commented Ian Matheson, chief executive of AIRA, in a statement accompanying the survey results.