Corporate Perception on Capital Markets : Non Financial Success Factors in Capital Market Communication
ISBN
978-3-00-022998-5
Type
book
Date Issued
2007
Author(s)
Editor(s)
Bommer, Kay
Abstract
A company's perception on capital markets determines its value and thereby its strategic options. And yet little is known about the corporate features and factors that determine the perceptions held by financial analysts, institutional investors and financial journalists. The common models of company evaluation usually focus all too strongly on financials alone.
In this study we argue that capital market participants face the challenge of having to assess the uncertain prospects of markets and companies. To reduce the unavoidable risks associated with this exercise, capital market participants draw on so-called qualitative, non-financial corporate factors. By considering these factors, they can assess the situation, capacities, resources and business potential of a company more realistically and thereby improve the quality of the required forecasts. In addition, qualitative corporate factors also provide the basis for a capital market reputation - that is, a collective judgment by capital market participants on the reliability, stability and trustworthiness of a company. Based on this reputation, the financial community regards a company's communication messages and growth prospects more or less critically.
This study, conducted among more than 200 financial analysts and institutional investors, leads to the conclusion that the perception of companies in capital markets rests on a number of qualitative factors that can be classified into seven categories: corporate communications, management quality, corporate strategy, corporate governance, corporate culture, customer and industrial relationships as well as public affairs. In a two-phase research process, the basic qualitative success factors of capital market perception were identified, described and weighted according to their significance. The categories and relevant subfactors elaborated in this report thus provide capital market participants with valuable information on the company's situation and have a significant impact on its reputation. We are convinced that investor relations professionals should consider the factors presented in this study in their work to ensure they really cater to the information needs of capital market participants. Consideration of qualitative factors enhances the quality of financial communications and contributes to capital market efficiency and transparency.
In this study we argue that capital market participants face the challenge of having to assess the uncertain prospects of markets and companies. To reduce the unavoidable risks associated with this exercise, capital market participants draw on so-called qualitative, non-financial corporate factors. By considering these factors, they can assess the situation, capacities, resources and business potential of a company more realistically and thereby improve the quality of the required forecasts. In addition, qualitative corporate factors also provide the basis for a capital market reputation - that is, a collective judgment by capital market participants on the reliability, stability and trustworthiness of a company. Based on this reputation, the financial community regards a company's communication messages and growth prospects more or less critically.
This study, conducted among more than 200 financial analysts and institutional investors, leads to the conclusion that the perception of companies in capital markets rests on a number of qualitative factors that can be classified into seven categories: corporate communications, management quality, corporate strategy, corporate governance, corporate culture, customer and industrial relationships as well as public affairs. In a two-phase research process, the basic qualitative success factors of capital market perception were identified, described and weighted according to their significance. The categories and relevant subfactors elaborated in this report thus provide capital market participants with valuable information on the company's situation and have a significant impact on its reputation. We are convinced that investor relations professionals should consider the factors presented in this study in their work to ensure they really cater to the information needs of capital market participants. Consideration of qualitative factors enhances the quality of financial communications and contributes to capital market efficiency and transparency.
Language
English
Keywords
Investor Relations
HSG Classification
contribution to practical use / society
Refereed
No
Publisher
Deutscher Investor Relations Verband DIRK
Publisher place
Hamburg
Start page
36
Subject(s)
Division(s)
Eprints ID
44082
File(s)![Thumbnail Image]()
open.access
Name
071025 - Studie_Corporate Perception_engl_final.pdf
Size
789.76 KB
Format
Adobe PDF
Checksum (MD5)
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