Now showing 1 - 3 of 3
  • Publication
    Qualitative Company Factors in Capital Market Communications
    How a company is perceived on financial markets substantially affects its value as well as its capacity to raise much needed resources. Past research, however, has largely neglected the factors and mechanisms that affect the judgement of financial analysts, institutional investors and business journalists: In the following research paper, we argue that capital market participants are faced with the challenge of estimating the uncertain future prospects of a company. In these estimations, the financial community is forced to rely on a less comprehensive informational base than that available to the company itself. Capital market participants enhance their judgements and evaluations of companies by taking non-financial factors into account. Such factors offer information on key company features that will affect or even determine its future development. Furthermore, based on non-financial as well as financial corporate factors, the financial community develops collective judgements about a company, its reliability, stability and trustworthiness. A company is attributed with a certain capital market reputation. Based on this reputation, the financial community will be more or less critical of a company's announcements regarding its future development. It will also be more or less tolerant regarding unexpected business developments. The qualitative, in-depth survey of 66 financial analysts, investors and financial journalists presented in this paper suggests that the process of corporate perception on capital markets is based on a range of non-financial factors, which can be grouped into 8 categories: Quality of management, strategy, communication, industry trends, corporate governance, customer & industry relations, corporate culture/employee relations and public affairs. In order to contribute to a company's value management, its financial communication function should pay close attention to the specific corporate factors that affect the judgements of capital markets participants. We believe that our research offers useful indications for the implementation of investor relations plans and activities as well as for reputation building on financial markets.
  • Publication
    Innovation's Role in the Formation of a Capital Market Reputation
    The way a company is perceived on financial markets substantially affects its value as well as its capacity to raise much needed resources. Past research, however, has shown a tendency to neglect the specific factors and mechanisms that affect the judgements of financial analysts, institutional investors and business journalists. In our research, as presented in this abstract, we argue that capital market participants, when faced with the challenge of estimating the uncertain future prospects of a company, rely on collective judgements about that company, its reliability, stability and trustworthiness. In other words, the financial community attributes companies with a 'capital market reputation'. Depending on this reputation, capital market participants will be more or less critical of a company's announcements regarding its future development. They will also be more or less tolerant regarding unexpected business developments. The formation of a capital market reputation is determined by the financial community's perception of a range of specific corporate factors, presented in this paper. Altogether, our research has shown that 'innovation' is one essential driver of a company's capital market reputation. In order to contribute to a company's value management, investor relations should pay close attention to this specific corporate factors that affects the judgements of capital markets participants. We believe that in this context our research offers useful indications for the implementation of investor relations plans and activities as well as for reputation building on financial markets.