Responsibility on corporate sites: precaution rather than looking ahead

Listed companies play it safe. They frequently use their corporate websites to protect themselves, rather than communicating their ambitions for the future. This emerged from Jungle Minds’ preliminary research for the 2009 FD Henri Sijthoff Award.

For the seventh consecutive year, Jungle Minds has conducted research on the quality of online financial communications for all companies listed on the Dutch stock exchange. More results will follow soon, as well as a summary of the 50 companies selected for the main research. In the meantime, following are a number of interesting conclusions:

1. Companies demonstrate their accountability well
2. Websites do not divulge information about the future
3. Cautious investments are being made in online tools

Corporate governance: companies are playing it safe

It appeared that last year companies were not communicating well online about their accountability for their business operations. The Corporate Governance part of the website often consisted of a number of PDF files. The tide has turned this year, however, and companies seem to have become completely accustomed to communicating about the Dutch corporate governance code (comply or explain). Information has become increasingly available in HTML. By offering the information directly in the form of web pages, it becomes easier to scan, more readable and better suited for reading read on screen. In the AEX, 56% received the maximum score, which represents an increase of 29%. Companies are apparently realizing that it’s essential to communicate in a transparent way about their corporate governance, i.e. the system by which their company is directed and controlled.

Vague company strategies

This development will undoubtedly please financial analysts. But are they satisfied about the financial content on corporate websites? Undoubtedly not. This year, companies scored lower in the area of ‘company information’. Why? They remain vague about their strategy. While in recent years companies had the courage to present clear company strategies and transparent financial targets, they have in the meantime become extremely reluctant to divulge this kind of information. They frequently restrict themselves to a vaguely defined mission and vision. This is perhaps understandable. Many organizations are experiencing stormy weather since the credit crisis reared its head and have been forced to redefine their strategies. Of course, it’s difficult to make predictions about profit and loss, but a first-rate description of a clear strategic approach is often lacking. Companies will have to start communicating as transparently as possible on these issues. This will be their only way to win (back) the confidence of investors.

Invest cautiously in online tools

Preliminary research for the Sijthoff Award has demonstrated that an increasing number of listed companies have become aware of the fact that online communications with the financial group offers huge opportunities. A website is no longer just a copy of the annual report’s texts, but is increasingly equipped with useful tools. Companies are realizing that thanks to their websites, many more opportunities are emerging to serve the target group with tailor-made facilities, offer interactive elements and create a richer corporate brand experience.

A number of online functions have now made a definite breakthrough and can be found on many corporate websites:

1. Alert services and RSS feeds
Visitors can indicate that they would like to be kept up to date on certain news announcements or upcoming events – by means of e-mail alerts and RSS feeds. These tools can be found in the press release archive and the financial calendar.

 
Ahold: financial calendar with an alert service

2. Interactive share price chart
Last year, a number of small- and mid-cap companies referred people interested in information about their shares to the Euronext website. This definitely seems a thing of the past. More and more websites contain a wide variety of financial tools. Current share prices are easily available and can be compared, for example, to the AEX or even to competitors. 

 
Draka: interactive share price chart

3. Audio webcasts
The number of websites containing a webcast of the presentation of the annual figures increased as compared to last year. More companies are therefore enabling visitors to gain insight via their corporate websites into matters under discussion. Striking in this respect is that this is occurring less frequently by means of video than last year. Companies opted more frequently for an audio webcast. The issue of cost undoubtedly played a major part in this development.

4. Online annual report
Last year, three quarters of all companies indicated that they intended to make their annual financial statements available online in the coming year. This did not happen, however, and the actual percentage this year was at 30%. The reason for their choice is perhaps logical. The development of an HTML annual report is pricey – after all, it means developing a new website. Nevertheless, companies should be aware that there is an ever-increasing demand for online annual reports, especially among journalists. This kind of report is easily accessible, easy to navigate (think, for example, of introducing related links) and is often equipped with additional interactive elements. Let’s have a look at the choices companies are going to make for their 2009 reports.

 
Shell: online annual report

Cutting costs is justified – not communicating isn’t

In short, it seems the financial crisis is having a definite impact on the corporate websites of listed companies. They are cutting costs on a number of online tools and technologies, and that’s understandable. But it’s precisely now that companies need to communicate about their policies and strategies in the most transparent way possible. Currently, the key question for investors, financial analysts and journalists simply is: ‘What are companies going to do in order to cope with the recession?’ He who dares…

Jungle Minds will soon be publishing the complete results of its preliminary research conducted within the framework of the 2009 FD Henri Sijthoff Award and will announce which 50 websites were evaluated in the main research.