COVID-19 has had a dramatic impact on the global economy and the performance of the stock market. This has led to an increased need for relevant and transparent reporting by listed companies, as investors seek to understand the impact and the future outlook for individual companies.
During this time the Financial Reporting Lab (Lab) has engaged with investors to seek to understand what their pressing questions are, and what investors would like clarified in corporate reporting.
Their key findings were that the investors were highly interested in short-term reporting. The focus should be on keeping the corporate website up-to-date and relevant, and investors wanted to get regular updates through quarterly reporting. This seems to be a result of the fact that the COVID-19 situation and its impact on companies is continually evolving, and therefore, investors are keen to be kept informed on any developments.
The key topics that investors are most interested in seeking clarity on are, unsurprisingly, financially focused. Investors are keen to understand the cash resources and liquidity of the business and how the expenditure of the business is being managed. Investors also have some level of interest in the operations of the business and how the company protects its key assets and competitive advantages.
This demonstrates that in this crisis, while discussing short-term impacts and focusing on the financial aspects of the business is key, there needs to be consideration for the long-term future of the business.
Our view is that it is critical that the long-term future of the business needs to be focused on in the corporate communications of the business, in both the corporate website and the Annual Report. There are a number of ways that this can be done. Focusing on the purpose, values and culture of the business and ensuring that the communications of the business are aligned is important. Consideration of the business model and sustainable competitive advantages is also critical for communicating the positioning of the long-term future of the business.
We would also encourage consideration of wider stakeholder groups beyond investors. Other stakeholders will be seeking reassurance during this time of crisis and it is important that the corporate communications addresses their information needs as well. Stakeholder mapping is an effective tool to understand the specific challenges facing your stakeholders. It will enable you to respond effectively which, in turn, maintains their positive perception of the company. Stakeholders’ challenges could be indirect or direct, and result from a number of potential causes in relation to the crisis.
For further information on how best to communicate during the COVID-19 crisis, please take a look at our crisis communications guide.