IR Monitor – 13 March 2024

In this week’s newsletter:

In this week’s newsletter:

• The Investor Forum publishes a White Paper on bridging the gaps between companies & investors
• Investors left in the dark after US companies fail to file on time. The Financial Times flags ADM, Mattel and NYCB among groups admitting that weaknesses in controls delayed financial reports
• Policymakers’ push to revive City IPOs clashes with LSEG’s lofty ambitions: politicians’ priorities are rubbing up against the group’s commercial interests suggests Financial News
• IR Magazine held a forum on AI for IR: key takeaways from Maxime Lopes
• How IR took over PR: a power shift took place during Covid, according to Simon English, and “the tedious IR function” overtook the PR department
• And finally … how to create an AI board member

This week’s news

Bridging the gaps between companies & investors

Promoting best practice dialogue, taking a focused approach, and recognising some uncomfortable truths are some of the key messages coming out of The Investor Forum’s latest White Paper, published last week. The report presents the findings of a comprehensive assessment of the state of primary dialogues between 28 listed UK companies and 25 investors. Arming market practitioners with practical recommendations, the paper seeks to clear the path for IR professionals looking to hold strategic conversations, both internally and externally, and advises prioritisation through a common focus on value creation. Included is an analysis of the challenges and opportunities of aligning investor influence with corporate sustainability, an investigation into the role of shareholder voting and stewardship activities, and an exploration of the importance of audit and assurance in ensuring robust and reliable information for all stakeholders. Not a light read, but the paper certainly offers IR professionals some refreshing words of wisdom (as well as some handy top tips).

Investors left in the dark after US companies fail to file on time

Weaknesses in internal financial controls and auditors wrestling with accounting problems are increasingly causing delays in the filing of annual reports in the US, warns the FT. So far this year, 16 companies with market caps over $1bn have said they will miss deadlines to file their annual reports in the US, almost double the number from last year, indicating a growing challenge and a new headache for IR teams.

Policymakers’ push to revive City IPOs clashes with LSEG’s lofty ambitions

The UK government and the London Stock Exchange Group (LSEG) can’t seem to agree on a pathway to profitability, according to Financial News. The LSEG hopes to encourage public offerings and prevent further listing losses to New York with regulatory reforms however, LSEG, the parent company, appears to have different ambitions. IPOs and equity trading only accounts for 3% of LSEG’s business these days, down from 25% in the mid-2010s. Similar to other exchange groups, ever since LSEG acquired Refinitiv in 2019, data has been the real revenue generator. With a new partnership with Microsoft rolling out this year, LSEG Data and Analytics is positioning itself as Bloomberg’s primary rival. The fixed income derivatives and clearing businesses have also proven profitable. And yet, LSEG can’t seem to convince government officials that building out its full-service financial infrastructure holds more long-term growth potential than creating a “Big Bang 2.0”.

AI for IR: key takeaways from Maxime Lopes

FTI’s own IR advisor Maxime Lopes has reported back from “AI and the buyside: Adapting your messaging to AI-driven capital markets”, a conference hosted last week by IR Magazine. Panels boasted speakers from leading UK corporates (GlaxoSmithKline, Rolls Royce, Vodafone) and financial institutions (Schroders, GIB Asset Management), all at different points in their AI integration. Readers will be happy to know that none predict the replacement of IROs by AI at any point in the future (!). In fact, panelists believe it will likely redirect time spent on tedious tasks back to the core function of the job: investor engagement. But many limitations still exist. Regulatory governance has a long way to go, data privacy risks remain, costs are high, and tools on the market are still prone to hallucinations and tone discrepancies. Therefore, companies should not underestimate the time required for quality control, and investing in a robust AI governance and policies is strongly advised as a starting point. 

How IR overtook PR

Writing in Roxhill’s Tomorrow’s Business , Simon English admits he rarely looks forward to chief executive meetings anymore. On the quarterly results calls he’s joined recently, CEOs have assumed a general dullness. Thankfully, this was not representative of their engaging off-call demeanour. English brought up this inconsistency to the companies’ communications heads, who agreed the regulatory necessity of IR functions and its subsequent standard practices – scripted and conservative messages – had usurped the flare of PR. English calls upon comms teams to “wrestle back control” and encourage IR teams to “let the perfectly interesting CEO be herself”.

And finally … how to create an AI board member

Last Tuesday, our FTI offices organised a fireside chat to celebrate the upcoming launch of Graphcore CEO Nigel Toon’s new book ‘How AI Thinks.’ Nestled in between his illuminating discussions on AI regulation and his sneak-peeks into the new release, he began to discuss one of his new and exciting projects at Graphcore; an AI board member. Load an AI model with extensive amounts of information on a company, sprinkled with comparative information on its peers and topped with a critical-thinking attitude and you may just have the perfect board member, without the worry of a coup, quipped our host Rory Cellan-Jones. The idea works in principle; the machine would have more information on the company than any human could hope to retain and can offer impartial counsel on a company’s strategy and initiatives. So, could we see an AI machine joining a Board near you?

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