Weber Shandwick Study Reveals that 80 Percent of U.S. Buy-Side Investors Report that Intangible Factors Impact Investment Decisions
– 89 Percent Say Management Quality/Confidence is Influential in Making an Investment Decision (the #1 intangible) –
– 67 Percent Say Media Coverage of a Company is Influential in Making an Investment Decision –
NEW YORK – November 2, 2017 – Non-financial factors (or “intangible factors ”) wield considerable influence over investor perceptions of a company and their ultimate investment decisions, according to a new survey released today by global communications and engagement firm Weber Shandwick. A majority of buy-side investors (80 percent) report that their firms assign “a lot” or “some” weight to a range of intangible factors when making an investment decision. Only 19 percent assign little to no weight to intangible factors. The study, conducted with KRC Research, surveyed 104 U.S. buy-side investors at financial organizations with over $500 million of assets under management by telephone.
“As capital markets, investor sentiment and the political environment evolve at faster and faster rates, publicly traded companies need to regularly reassess their communications — both the messaging and the strategy — to provide investors continued confidence in the company’s strategy and growth potential. Understanding which factors, outlets and communications most influence investors’ perceptions can have a meaningful impact on valuation. A proactive approach to financial communications is more important than ever,” said Liz Cohen, EVP, and Head of Financial Communications at Weber Shandwick.
Intangible Factors Influence Investment Decisions
According to the research, Report From the Buy Side: The Power of Intangible Factors on Investment Decisions, the top three intangible factors influencing investors include quality of and confidence in leadership, transparency in reporting company performance and corporate governance and ethical standards.
Half of investors (51 percent) stated that their firms have a methodology in place for assessing the value of non-financials. For those with a method for assessing intangibles, internal research tops the list.
Focus on Leadership Engagement & Visibility
Importantly, the Weber Shandwick study found that investors consider their personal interactions with the C-Suite to be critical in making investment decisions. Investors would like to interact with senior management on average seven times per year, either by email (3.1 times per year), by phone (2.6 times) or in-person (1.3 times).
As expected, investors pay extra attention to CEO actions during times of financial difficulty (78 percent), strategic investments or transactions (77 percent), public image crises (75 percent) and government scrutiny (75 percent).
Nearly four in 10 investors (38 percent) surveyed say they follow senior leaders of companies on social media.
Variety of Sources Used for Investment Decisions
The study further found that nearly all investors (98 percent) rely on multiple sources when evaluating intangibles, with the top sources being proprietary research, the Bloomberg Terminal and a company’s website.
From a media standpoint, Bloomberg News and The Wall Street Journal were cited as the most credible outlets for investment decisions.
Additionally, 70 percent of investors reported that they monitor social media for company news, although at an infrequent rate: 20 percent of investors reported that they check social media on a daily basis.
Six Guidelines for Influencing Investment Decisions through Communications
Based on our research findings, Weber Shandwick recommends the following strategies to companies and communicators looking to more effectively communicate with the investment community. A full explanation of each can be found in the report.
- Don’t overlook your intangible assets.
- Make CEOs and other senior leaders personally available.
- Ensure intangible assets are easy to identify on public-facing channels and properties.
- Don’t ignore social media. Keep an active and fresh presence on social media.
- Build a strategic engagement plan for the CEO and ensure he/she is media-ready.
- Be in lockstep with the government relations team. Regulatory changes or policy decisions are among top issues that are influential in investment decisions with the new presidential administration.
Please click here for the full report and infographic.
About the Research
The Report From the Buy Side: The Power of Intangible Factors on Investment Decisions was commissioned by Weber Shandwick and conducted by KRC Research from June 14 to July 17, 2017. A 20-minute telephone survey was conducted among 104 U.S. buy-side investors, 45% of whom are portfolio managers. Respondents in the survey work for buy-side investment financial organizations with at least $500 million assets under management, such as banks, hedge funds, pension funds, or asset management firms. As part of their positions, respondents were chosen who personally provide recommendations to inform decisions about the value of a company, which ultimately lead to substantial trades on behalf of their organization. The respondents’ financial organizations’ portfolios range across various sectors.
About Weber Shandwick
Weber Shandwick is a leading global communications and engagement firm in 80 cities across 34 countries, with a network extending to 128 cities in 81 countries. The firm’s diverse team of strategists, analysts, producers, designers, developers and campaign activators has won the most prestigious awards in the world for innovative, creative approaches and impactful work. Weber Shandwick was the only public relations agency included on the Advertising Age Agency A-list in 2014 and 2015 and the only PR firm designated an A-List Agency Standout in 2017. Weber Shandwick was honored as PRWeek’s Global Agency of the Year in 2015, 2016 and 2017, The Holmes Report’s Global Agency of the Year in 2010, 2012, 2014, 2015 and 2017, and The Holmes Report’s Global Digital Agency of the Year in 2016. The firm deploys deep expertise across sectors and specialty areas, including consumer marketing, corporate reputation, healthcare, technology, public affairs, financial services, employee engagement, social impact, financial communications and crisis management, using proprietary social, digital and analytics methodologies. Weber Shandwick is part of the Interpublic Group (NYSE: IPG). For more information, visit http://www.webershandwick.com.
About KRC Research
KRC Research is a global full-service nonpartisan opinion research and strategy firm. A unit of the Interpublic Group of Companies (NYSE: IPG), KRC Research offers the quality and custom service of a small firm with the reach of a global organization. For over 30 years, KRC Research has worked on behalf of corporations, governments, not-for-profits and the communications firms that represent them. Staffed with multidisciplinary research professionals, KRC combines sophisticated research tools with real-world communications experience. For more information, visit www.krcresearch.com.