Beyond the Numbers, Differentiated Earnings Calls Can Have a Significant Impact on Shareholder Value, According to Corbin Advisor's Latest Research
- Corbin Advisor's survey on earnings best practices identified several influential disconnects between investor preferences and company habits
- 90% of investors assert the earnings call is one of the most “meaningful” sources of information
- 88% of investors consider the earnings deck valuable compared to just 39% of surveyed investor relations professionals
- Survey participants urge companies to tie strategic goals to operating results every time they communicate with the financial community
- Striking the right balance between reporting the past and roadmapping the future is a key determinant of the quality of the earnings call
HARTFORD, Conn. - (BUSINESS WIRE) - June 16, 2015 - Corbin Advisors, a leading investor research and investor relations (IR) advisory firm, today released Earnings Calls as a Competitive Tool, a comprehensive thought leadership report linking investor and IR professional insights and best practices. The study, unveiled at the annual National Investor Relations Institute (NIRI) Conference held in Chicago, incorporates representative samples from small-, mid- and large-cap company investor relations programs and global institutional investors.
“The quarterly earnings call is one of the most powerful means a company has within its control to broadly and clearly disseminate essential information to the financial community,” commented Elena Doom, Managing Partner of Corbin Advisors. “Our study reveals a significant opportunity for corporations to leverage the earnings calls more effectively.”
According to Corbin’s research, corporate issuers and management teams are increasingly recognizing the benefits of publishing integrated earnings materials to the investor community, including an earnings press release, presentation deck and call transcript. While the press release itself is filed with the SEC, the others are optional documents often comprising greater insights and relevant information around market and business drivers, forward-looking expectations and key assumptions.
According to one investment community participant, best practices can include “When the release discusses more than just the reported numbers, it can be helpful; discussion of outlook, end market demand and strategy helps to add context to the reported numbers.”
Conversely, others contend, “No slide deck, confusing messaging and too much data” are examples of worst practices.
“These identified worst practices have been repeated by some of the best-run and smartest companies in the world and often arise out of routine and lack of awareness on how best to utilize this critical communication channel,” continued Doom.
Corbin advocates that companies can differentiate themselves through both consistent execution and effective messaging. “Earnings calls, while historically rote in nature, are increasingly becoming a more strategic tool as companies vie for investor mindshare. Four times a year management has the opportunity to tell their story, dispel misperceptions, communicate long-term strategies, showcase management strength – senior and bench – and demonstrate traction on key initiatives and goals, and they are wells served by fully utilizing that channel,” concluded Doom.
Corbin Advisor's independent, three-pronged approach included input from 165 institutional investors and 145 IR professionals globally, as well as an analysis of a sampling of 200 public companies spanning the Dow 30, S&P 500 and Russell 2000.
Since 2006, Corbin Advisors has tracked investor sentiment on a quarterly basis. Inside The Buy-side® and other research on real-time investor sentiment, IR best practices and case studies are available at CorbinAdvisors.com