5/19/2022
ICR's 'Taking Stock of Communications' Survey: Majority of Professional Investors Say Non-Financial Factors Play a Critical Role in Company Valuation
Business Wire (05/19/22)
Four in Five professional investors (80%) believe that at least 20% of a company’s valuation is impacted by non-financial factors, and more than half (57%) believe it’s at least 30%. These are among the findings of the 2022 Taking Stock of Communications survey, conducted by PRWeek on behalf of ICR, a strategic communications and advisory firm. The survey found that communications professionals (e.g. investor relations officers, corporate communications, and marketing executives), whose expertise it is to help clarify and amplify financial results, actually underestimate the value of non-financial factors by about 10%. When compared to the professional investors, seven in 10 communications professionals polled (71%) believe that at least 20% of a company’s valuation is impacted by non-financial factors, while less than half (45%) believe it’s at least 30%. Overall, when asked how much value specific non-financial factors impact investor perception of a company’s valuation, “perceived credibility of management team” ranked highest (84%), followed by a “clearly articulated strategy and business plan” (81%) and “quality of communication” (76%). It’s worth noting that “quantity of communication” was identified as the least important factor (20%). “The quality and presentation of a company’s narrative to complement the numbers is a critical driver of a company’s equity value,” said Tom Ryan, founder and CEO, ICR. “Creating context around the numbers can come in several ways, such as providing thoughtful quarterly commentary, delivering insightful answers to tough questions, and articulating the growth story through business and financial media.” Related to third-party sources of company news and information, business and financial media remains very influential on the decisions that investors make, with 85% of survey respondents identifying both Bloomberg News and The Wall Street Journal as the most relevant outlets. Beyond traditional media, more than half of respondents (54%) said social media is deemed to have a material impact on investment decisions, ranking Twitter (64%) and LinkedIn (59%) as the most effective to communicate with investors. Similar to viewpoints related to non-financial factors, a higher percentage of professional investors (66%) than communications professionals (49%) feel social media is impactful, suggesting the latter may not be giving it enough focus in this regard. In addition, the survey revealed large gaps between how communications professionals rate their investor-focused communications compared to how professional investors rate them. When asked to judge their effectiveness across seven criteria, communications professionals rated themselves either “excellent” or “good” between 25% and 44.9% higher than professional investors did. The important takeaway is that investors have a different perspective than most traditional audiences and it is critical to fully understand their perspective, the communication that resonates, and how best to deliver it.
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