Information production

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to the management team.

4.2.1 Information production

Producing information is the base of information flow. Information production is important since it not only influences how the investment community views and evaluates the company’s current and future performance but also determines its corporate image.

Financial information is the key topic that the investment community is interested in. IROs interact with finance department very often to receive latest financial data and then think about how to interpret these numbers. Some IROs also cooperate with public relations teams to make sure they are on the same page.

IR is like the “makeup artist of a corporation.”

Non-financial information is another crucial part that IROs focus on.

Besides financial data, the investment community requires more non-financial information such as current operation situation, strategic plans and etc. Sometimes they also ask information that is not directly related to profit-making topics such as the development history of the company, shareholder structure and the members of BOD.

As a result, IROs need to have accesses to non-financial information including latest products, research and development, strategies and etc. They gather information from different parties and reproduce it to useful and understandable information to their audiences.

“Investors need more information than media. They want something more than news releases. Publicly traded companies have to serve

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investors and they have to provide a window that has a database to respond to investors’ needs. They care more about strategies instead of numbers only.” (Interviewee No.10)

In addition to talking about current situations, “you have to know how and what to talk about outlooks.” (Interviewee No.5) the outlooks should be compliant with securities regulations and give the investment community a proper expectation.

With all the materials and corporate information, it is IRO’s responsibility to produce a story that is proper and help build up a positive corporate image to win the investment community’s trust toward the company. It should also meet the requirement of transparency and the principle of equality.

“Transparency is the simplest word to describe information disclosure. There is a line in the concept of transparency. Defining where the line should be is what IR should help the top management. Companies have the duty to remain transparent but it is usually misunderstood or misuse. We need to educate and communicate what is right. IR should follow the principle of honesty, fair, and transparent when delivering information and at the same time compliant with the law and the top management’s expectation.” (Interviewee No.2)

“Telecom industry has the strictest standard regarding transparency.

[…] Comparing to other industries, telecom is more stable. To attract investors’ interests to a stable company, you need to let them feel reassured by being transparent.” (Interviewee No.7)

Though transparency is required, sometimes there are some confidential information that investors may ask but IROs are not allowed to reveal. Regarding this, IROs need to know how to differentiate what can be told and what cannot.

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“I think this is an ability or quality that IR should cultivate. For example, you cannot disclose sensitive information. Sometimes IR even has to advise your boss what should not be revealed. First of all, you cannot talk about NDA [non-disclosure agreement]. This is what everyone knows.

Secondly, you have to predict what might happen and what results you may raise if you give out the information.” (Interviewee No.8)

Based on the principle of equality, the information provided to every stakeholder should be the same.

“Information asymmetry should be avoided. That is, you should always tell your clients the same information all the time. You can tell the story from different angles, but the information should not be different.”

(Interviewee No.11)

In addition to principles of transparency and equality, IROs focus and deliver a story from different viewpoints when disseminating information to different parties.

“Different types of investors also put emphasis on different topics. If he/ she is a short-fund and focuses on quarter performances, he/ she will not care about long term issues. This is for sure.” (Interviewee No.5)

Interviewee No. 8 said that the key is to understand who the audience. An IR practitioner must know what his/her audience wants.

“Since I am the spokesperson, I have to deal with all different publics including retail shareholders, major shareholders, QFII investors, and even mass media. The key of IR work is to understand your clients well. You have to deliver different message from different angles to each client. […] They need different stories. […] For example, foreign investors may want to know the reasons behind financial numbers and journalists

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want quick and instant updates to write reports. […] For retail shareholders, who might be very short-term buyers, they only care about the stock price not the sales performance. You may need to listen to their complaint before you calm them down. You communicate in different ways with different external audiences. You have to know their needs and give what they want, not using a same method all the time.” (Interviewee No.8)