Increased disclosure comes to the fore

A survey of 80 investor relations directors has revealed a shift in the way companies are communicating with investors in response to the recession. The biggest development has seen over 40% increase their disclosure over the past year, with a further 28% planning to do so before the end of 2009. Results in the financial sector were even more pronounced in the Citigate Dewe Rogerson poll. Half of the respondents plan to increase disclosure relating to banking covenants and two thirds intend to do likewise when it comes to details of current financing. Nearly a quarter of companies (23%) are providing more guidance relating to future performance, with just 5% dropping their financial targets. However, 26% have seen a decline in the quality of analyst coverage, mainly due to analyst turnover, analysts having to cover more companies and a decrease in the analysts’ level of experience. Michael Berkeley, Citigate Dewe Rogerson, commented: “With investors and analysts increasingly focused on earnings resilience, debt servicing and capital strength, companies need to shift the focus of their financial communications… with greater disclosure of financing, banking covenants and downside stress testing.”