Elevating your share price
October 7, 2022 | Parikshit Singh
Declining investor confidence can trace to poor corporate hygiene, weak investor relations & communications and bad executive behaviour.
Corporate hygiene is the organizational equivalent of brushing your teeth daily.
Simply put, many investors will not want to own and trust companies that don’t operate responsibly, sensibly and ethically, regardless of market potential. Addressing high visibility problem areas can improve shareholder confidence and hopefully re-inflate share prices. This may include:
- Refine your investor communications strategy: Public companies need to move away from cheerleading to better managing the expectations of a largely retail investor base. This would include sensible and realistic future state messaging, greater disclosures and more senior leadership involvement. Furthermore, many investors have legitimate concerns that need to be addressed. Executive silence – coupled with a decline in equity analyst coverage – can fuel investors’ fears about worst-case scenarios. CEOs and CFOs must be more proactive in getting their message out across all communication channels.
- Signal confidence through stock purchases: Announcements of executive purchases and share buybacks can signal to the market that management has confidence in the business and the stock is undervalued.
- Curb dodgy executive practices: Exaggerated stock promotion, excessive pay and ‘Imperial-like’ management behaviours are not confidence-inducing habits. They should be curtailed.
- Improve governance & reporting: Better Board governance around risk management, diversity, and disclosure will foster trust and allay concerns, especially with tentative institutional investors.
- Retool your financing strategy: For many companies in today’s equity markets, raising equity capital can be perceived as highly dilutive (i.e. negatively) by investors. Firms might be better off raising debt or using cash flow to fund operations and investment.
Parikshit Singh, Director
Hal Clyde Denison Limited
Jaipur, Registered Office
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We hope this newsletter finds you well. In this edition, we will be discussing the importance of Corporate Governance, ESG, Strategy, and Communications for Investor Relations.
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Sixty-two percent of directors say ESG issues are a part of the board’s enterprise risk management discussions. Source: PwC, 2021 Annual Corporate Directors Survey, October 2021
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