Technology Has Made Some Big Changes to Investor Relations
28 January 2011
Investor relations (IR) as a standalone profession has only been around for about 50 years. Prior to that, IR was a part time activity for chief financial officers or treasurers in most companies, and they often considered it as just one more thing they had to tick off the to-do list. Although the early part of my career was in financial analysis, profit planning and controllership, I’m fortunate to have been an active participant in IR for nearly half of the fifty-odd years that the profession has been a career. I can tell you first-hand that technology has had a significant impact on the field.
In the “early days”, a company issued an earnings release, and unless you were a company like General Motors or Proctor and Gamble, Dow Jones would run a single sentence that summarized your results, and that was pretty much it. Email wasn’t yet invented and fax was rarely used. We would have half a dozen people answering the phones and reading the full press release and pages of numbers to analysts over the phone. For a hard copy, people would have to wait for snail mail delivery a couple days later.
By the late 1980s, when I was with Data General Corporation, we started sending earnings reports via blast fax to several hundred names, basically to those people who were on our contact list. This was a huge improvement. We still had to field hundreds of calls from people who weren’t on the blast fax list, but instead of reading the release over the phone, we would offer to send them a fax and add their names to our list. About that time, discussions began among my investor relations brethren about doing large scale conference calls, where a management team could make some comments that went beyond the press release and then take questions from investors and analysts. I suggested to my boss that we should hold a conference call with our investors to make the process more efficient, save time and money. In the first quarter of 1990, we held our first conference call. From then on, we held regularly scheduled quarterly earnings calls, which is now very much the standard for almost all publicly traded companies.
When Sarbanes-Oxley originated in 2002, the rules of disclosure changed. Now financial information for public companies needs to be disclosed to everyone at the same time. Today, the use of the Internet to make public announcements and effect disclosure has become common place, with companies posting online press releases, holding investor meetings via web conferences/webcasts, and utilizing social media. Technology has provided more immediate vehicles for companies to ensure that all interested parties have access to disclosed information in a fair and timely manner.
Considering the ever changing landscape in technology and how we communicate with the outside world, it will be interesting to see what the coming years bring and how future technology impacts the ongoing evolution of investor relations in general, and Intralinks specifically.