Listed companies who communicate openly with their shareholders are able to build a solid reputation that won’t collapse at the first sign of trouble. The more reliable your corporate communication, the bigger the chance that investors won’t jump ship when the outlook isn’t quite as bright. And that might just save you from seeing your share price fall off a cliff, Alexander Dominicus, portfolio manager at asset management firm MainFirst, recently argued in a fascinating blog post. We’ll run you through the most important insights below.

The way in which you communicate with investors — and with the outside world in general — has a major impact on how the market views your company. When communicating about a new investment or acquisition, it can often be tempting to emphasise only the positive aspects. But “when a company’s communication is too optimistic, and that company then encounters a certain risk, the evolution of the fundamentals will not match the high expectations that have been set, and investors will be left disappointed,” Dominicus warns.

Go for realistic and open communication

In other words, when communicating as a business, it is important to address any risks you might face, instead of focusing only on opportunities and chances. The best thing to do is to offer a realistic perspective on the situation. “That way, your business will be able to meet the expectations you’ve set, or even positively surpass them if certain risks fail to manifest,” according to Dominicus.

When you communicate transparently, confidence among investors will grow, and they will see you as more credible — and the reputation of your company will survive any setbacks you may encounter. Having to adjust an outlook or objective every now and then is part of economic reality, but can easily cause concern among investors. However, when confidence is high, they won’t lose any sleep over it. As a result, the impact of any lowered expectations on your share price will be minimal.

“Open communication forms the basis of every good corporate communication strategy, and MainFirst has really hit the nail on the head in that respect. But open communication alone is not enough: good corporate communication also needs to be clear and unambiguous. Try to identify the core messages that reflect the activities and values of your company. By returning to those core messages time and time again, you can create clear lines in your corporate communication that offer a sense of familiarity to the outside world. That way, current and future shareholders will have a better understanding of what your organisation is all about, and what its strong points are.” — Wim Heirbaut, Senior PR Consultant at Befirm.

Transparent but quantifiable

Dominicus also stresses one final important point: shareholders are highly demanding when it comes to corporate communication. They want to see a clear plan setting out your company’s objectives, and the steps you will be taking to realise those objectives. As such, it is essential that you keep them up to date on your progress on a regular basis. In other words, corporate communication today not only needs to be transparent, it also needs to be quantifiable.

Visit the MainFirst website to read the full blog post by Alexander Dominicus and other fascinating insights.

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