Shareholder Forums

Internet keeps marching on into the domain of investor relations. Following emails, Web sites and even blogs, companies are now considering launching online forums, where shareholders, financial analysts and other interested parties can chat with the management and with each other about whatever they want to.

Or, to be more specific, whatever the management allows them to chat about. This is an important caveat because hosting its own forum gives the company a complete control over the content - including moderation and pre-moderation of every post and comment. Seems like a lot of extra work with a potential for disaster.... The question is: Is it worth it?

The answer of Mike O'Brien is: Definitely, yes. He is the leader behind eShareholder forum, a turn-key solution for such shareholder forums. I spent some time on the phone with him trying to figure out how it works and it seems like a well-designed product.

However, I have hard times trying to imagine an analyst from Calpers going to the forum to have his questions answered. Would not they pick up the phone? Unless the situation in investor relations changed a lot since I returned back to academia, I, as an investor relations officer, knew all the analysts covering my company (and covering my industry) and they knew me. The same was true for the large investors. We communicated quite often via phone and email and I would not see much value in shareholder forum back then.

Now, the situation might be quite different for a company that has a large private retail shareholder base. Do we still have companies like that? I do not know. Statistics tell me that the U.S. market is highly institutionalized, but who knows what we will have at the end of this current financial crisis. We might return to the golden times of 1950s when retail ruled the market and financial intermediaries hardly existed. We might, but I doubt that.

Another user of eShareholder forum might be a start-up with no analyst coverage or the one just trying to lure in some big investors. Again, I am not sure if that would be the best strategy to use, but maybe one of the strategies.

Here is the article that thinks shareholder forums can provide "an innovative and cutting-edge way of distinguishing itself from its peers and competitors." Again, I am not sure how much value investors and analysts will add for this "cutting-edge" unless it has different information (unlikely) or provides it faster than a phone call (unlikely). Can the interaction between investors themselves on the forum create additional value for the company? Once again, I am not sure.

So, in conclusion, I think eShareholder forum is a great forum product. It is well-designed and includes all the neccessary controls and components. But how much companies today need any kind of shareholder forums I do not know...

1 comment:

Anonymous said...

I think shareholder forums are one of the new tools that companies can use to keep their investors informed. This would not only help to provide input by investors, but possibly attract new investors.