IR Jobs on the Rise?

In a webchat held on Monday April 19th, 2010, NIRI President Jeffrey Morgan said that the current employment for IRO's is picking up from where it once was last May. Although the job market isn't as stable and open as it once was just a few years back, it's definitely improving.

After reading Dominick Jones' blogpost today, maybe his analysis of the poor performance done by IR departments in monitoring social media, will further increase the improving IR job market. Jones' research has found that the lack of social media knowledge and poor monitoring activity by IR departments is potentially putting their respective companies at legal risk.

There are many social media compliance risks and if IRO's aren't carefully monitoring the flow of information on their company and industry, as well as keeping up to date with regulations, this could result in a legal issue. According to Jones, current IR departments are not as knowledgeable as they should be and are not actively engaging in online discussion about their company.

Maybe that's where we, Class of 2010 graduates, will prevail. As an emerging member of the class of 2010, with an interest in Investor Relations, I hold a vital piece of experience that even IRO veterans may not possess, social media knowledge and the ability to quickly adapt to changes within it.

Apple CEO looks Sick

An issue I am considering to write my final case study on is about Apple CEO Steve Jobs and shareholder reaction to his sickly appearance. Apple released news of Jobs' pancreatic cancer when he had his surgery to remove it. Since then it has been a situation closely monitored by investors. Essentially many believe that Jobs is the driving creative force of the organization and thus heavily weight his health on the success of the company.

Although there are no legal requirements to submit updates on the health of the company's employees, shareholders still should probably be informed on the health of upper-management. If handled correctly, shareholders can generate more trust in the IRO's, but moving forward if Apple denies serious health questions for being only small issues of concern and it turns out Jobs is not doing very well, then it could result in a serious dip in share price.

Conference Calls

Conference calls is an easy way for IRO's and members of a company to meet with investors, without LITERALLY meeting with investors in person. However, Reg. FD has put restrictions on how businesses conduct conference calls with investors and analysts.

Conference calls are beneficial to investors because they can hear their top management speak and really learn what they are doing with their money. They can also potentially get non verbal cues, to give them a better idea of what is going on.

Reg. FD has put restraints on conference calls, ensuring that they have to be conducted with all investors, or at least attempted. This puts a great deal of pressure on IRO's to plan these meetings well in advance with their constituents. At first, it lead to a massive decrease in IR conference calls.

IR Releases and their Effects

An extremely interesting article, titled "Are Investors Influenced By How Earnings Press Releases Are Written?" written by Elaine Henry takes a look at IR Releases and their effects on those who read them.

The article was written based on the two part study she had conducted. The purpose of the study was to gain an increased understanding of the firm-investor communication process. The first part of the study looked at genres of IR releases. She took a look at how the length, usage of numbers, complexity of information and tone of article had an effect on how readers reacted to the article.

The second part of the article used event studies to gauge the effect of the releases. Effects in share price, specifically abnormal returns. Abnormal returns are whether a firm's stock exhibited higher or lower returns around the time of an event.

Conclusions of the study found that longer press releases had less of an impact than short, concise releases. Positive tone induced a positive reaction. However, if the tone had overly praised the company or was too overboard with positivity, it contributed to a negative feeling. Numerical intensity could potentially create negative effects. Again, the amount of numbers used needed to be easily understood and couldn't flood the article.

Importance of Relationships

It is extremely important to have a strong relationship between your company's IRO's and the rest of the business community. In this context, the rest of the business community involves the company's investors, financial analysts as well as the rest of the financial community that can be potential investors.

Many IRO professionals believe that the relationship between an investor and an IRO means more than the actual numbers on Wall St. A strong relationship will overcome a dip in share price and the negative media attention of a scandal or situation that involves your company.

But how do we measure relationships? We can directly ask investors and financial analysts of their experience with your company and the IRO's they've dealt with. You can also ask all investors to give feedback in the form of questionnaires. Also, it's most likely that a relationship is strong if an investor has invested with the company for an extended period of time.

Let's take two companies, Disney and Apple. Disney is more likely to rely upon these relationships because they are not frequently coming out with new products that have a direct effect on their share price or brand in the eyes of the consumers. Apple however is constantly coming out with cutting edge technology that is re-inforcing its brand image and affecting its share price.

Disney needs to consistently engage in strong relationships and reinforce their "family experience" and "strong and reliable" share price. Apple doesn't have to rely on relationships as much as its cutting edge products will attract consumers and keep it in the fore-front of its consumers and investors minds.

SOX Act

The Sarabanes Oxley Act was initiated in 2002. Most say it was response to the fraud involved with the Enron scandal. Regardless, it is to be followed by all public companies. The Act has 11 Titles.

I. Public Company Accounting Oversight Board
II. Auditor Independence
III. Corporate Responsibility
IV. Enhanced Financial Disclosures
V. Analyst Conflicts of Interest
VI. Commission Resources and Authority
VII. Studies and Reports
VIII. Corporate and Criminal Fraud Accountability
IX. White Collar Crime Penalty Enhancement
X. Corporate Tax Returns
XI. Corporate Fraud Accountability

To me, the most important part of the SOX Act is title V. This ensures that the auditors must not be connected to the organization and completely impartial. This is an attempt to bring legitimacy to the auditing process. Unfortunately this has brought up additional costs to companies. Each title adds significant costs to each companies' responsibility in order to comply with the SOX Act.

Good for us, as investors, but does it only hurt the companies that were conducting ethical and trustworthy business?

Comparing Blogs to Other Social Media

Social Media-

Examples of Social media are websites like facebook, linkedin, blogger, myspace, and twitter. These sites enable internet users to connect with just about anyone in the world and to publicly post virtually anything they'd like. However, what is your preference? Does your preference change depending on what you are searching for?

Myspace is not used as much in the corporate world. Facebook is used by companies, but varies depending on the industry. Linkedin is more for professionals as themselves, rather than companies individually. Blogs are open to anyone, but often run by those representing their company. Twitter allows users to update 140 character messages either directing people to websites or other twitter account messages.

For me and I believe IRO's as well, I look for credentials in order to bring validity to what I read. The amount of people following a twitter account, amount of people following a blog or the amount of friends of a facebook account helps establish this validity. However, there is always that question in my head of whether or not this is the OFFICIAL twitter or the OFFICIAL facebook of a company.

My preference for search credible information through social media is facebook and now twitter. What about yours? Where do you search for information on companies and what do you use to build that credibility?

Issues- Blogs about Companies Can be Run by Anybody

Large companies often get much coverage from the media, both good and bad. With weblog providing sites such as blogger.com, any person who accesses the internet is able to publicly post their opinions on anything they want.

Blogs like goldmansachs666 and JPMorgan666 actively point out the flaws in each of their respective companies (Goldman Sachs, JPMorgan) and rarely ever frame their information from any other angle other than one that is negative towards that business.

How does an IR professional deal with these sites? Everybody has a different opinion on how to deal with this problem and it is often a case by case basis. Listening to a Q4 webchat on blogs, they discussed how exactly they approach this issue.

Some tips:
Understand who you're talking to- is this person going to care about what you have to say? Are you just wasting your time?

Assess the quality and quantity of the audience- How many people will this reach? Are these highly involved stakeholders, or are these people not actively checking this site anymore

Inform the misinformed- You should always converse with your public if they are misinformed on a particular issue or topic


I'd like to ask for some feedback amongst the IR professional world... What are your personal tips on monitoring your company blog as well as the blogs that are talking about your own company, whether it be positive of negative comments.

Blogs Gone Wrong

Assigned for our Investor Relations are case studies (if you are interested in these case studies, feel free to contact me and I would love to send them to you). Coincidentally the first case study was about a controversy that occurred as a result of the CEO of Whole Foods making unmonitored blog posts. CEO John Mackey, had his own blog, in which he was making posts about Whole Foods. At the same time, he was posting under a different username (harodeb, which is his wife's name) speaking very highly of Whole Foods and posting negatively about Wild Oats which Whole Foods was looking to acquire. Here is a look at Mackey's Blog.

Whole Foods was lacking a proper Investor Relations department to monitor the activities of their CEO on the web. Anything posted on the internet is accessible to all those who use the internet.

2 Things to Debate/Learn from:
1. Was Mackey's sock puppeting actions ethical?
2. How did Whole Foods respond?

1. Ethics, a whole IR issue within itself. Does it have to be documented and officially termed unethical in order for it to be considered ethical or not? Who or what is the determinant to whether or not its ethical.

Personally, I feel that it's unethical to post under a disguised username, however I understand the argument that can be made to say that it is ethical. The ethical argument would probably say that as long as the information is coming out, there shouldn't be an issue. The CEO is held to higher standards by the public to only speak in a certain way, and maybe this disguised username is his way to express his freedom of speech

2. Whole Foods' response was to take away Mackey's authority to access his blog. After the situation had come out a little more, Mackey then issued a letter explaining his actions and offered his bloggers the opportunity to post questions and comments of which Mackey gave his response to.

Sun CEO Speaks out on Corporate Blogs

As a reflection to one of the first videos we watched in our Investor Relations class, I used this video to help propel me in my search of answers of how blogs have affected today's companies. Sun Microsystems CEO Jonathan Schwartz, spoke with Timothy O'Reilly of O'Reilly Media, about how he uses blogs as a form of communication and gives a few tips of advice to other CEO's on how to use blogs.

Schwartz claims that blogs themselves are going to become anachronistic, but currently serve as a means of effective communication. In order to lead, one must communicate with their marketplace. Years ago, in order to communicate, a CEO would have to travel to make appearances and represent their company first hand. Now we can communicate effectively and often.

For other CEO's, remember that you must also communicate with your employees. What better way to do this than to blog, and connect with both publics, internal and external. You must communicate in order to lead, so why not blog? It's your personal voice and like everything else, no matter what people WILL disagree with you.

Why Investor Relations and Blogs?

I have chosen the investor relations issue of blogs. Weblogs have had an enormous impact on the internet. Websites like blogger.com have given anyone the opportunity to write and post blogs that anyone else can view. This has created a great tool for smaller companies to be able to have their own blogs, but for large corporations, it has been a headache.

Smaller companies have limited budgets thus making it harder for them to run their own websites either internally or externally. Large companies have their own websites and don't necessarily need to host their own blogs. For instance, Goldmann Sachs has their own website, and now because of bloggers, have an even more incredible headache because of blogs like this one. It's hard not to find the content as factual. The makers of this blog have many other blogs negatively depicting many other of our nation's biggest company.

Should there be credentials in order to run a blog about someone else's company? Or does this help increase legitimate flow of communication between large companies and their shareholders?

Some of the many questions that will be answered throughout the remainder of this blog

First Post

This is a student's blog for the Investor Relations class at Quinnipiac University taught by Professor Laskin. As such, I as The author of this blog make no representations as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All information is provided on an as-is basis. Opinions expressed on this blog are James Mullany's personal opinions and do not represent opinion of the Quinnipiac University or opinion of the instructor of the class.

This blog will focus on blogs and the effects it has on Investor Relations.