Hi-Fi: Pumping up the Valuation Volume
In announcements on strategic actions, companies often present the singular act as sufficient cause for a boost in shareholder value. This week in Street Talking on NEXT, I argue that that is not enough. To enjoy a higher valuation, companies need to improve the information environment to give investors a clearer view on the business. Simply focusing on other companies that have enjoyed higher trading multiples consequent to such transactions misses the subsequent actions they took in ensuring that the markets had a better understanding of their value creating actions.
This week marks the second anniversary since Apple, the maker of iconic products, announced its entry into the mobile handset space with the iPhone. On the same day Steve Jobs, its CEO, demoed the phone at the January 2007 MacWorld Conference, the company changed its name from Apple Computer to simply Apple, Inc. The Cupertino, California-based company’s decision to excise ‘computer’ from its name was intended to reflect its transition from solely designing and making personal computing products with cult status to a broader portfolio of consumer electronics goods and services, including on-line distribution of music, home entertainment systems, digital audio players, cellphones, software and of course, computers with wider appeal outside its core geek demographic. Read More…
Lost in translation, apples and oranges, or tomahto to tomayto?: The need for companies on the Nigerian Stock Exchange to carry the investment community along in the transition to International Financial Reporting Standards (IFRS).
With less than seventeen months to go to the Central Bank of Nigeria mandated deadline for the adoption of the International Financial Reporting Standards (IFRS) by Nigerian banks, and twenty-seven months to its obligatory adoption by all companies listed on the Nigerian Stock Exchange, it is curious that no institution has made an effort to sensitize investors and analysts on the significance of the new accounting standards. Instead, those institutions that have adopted IFRS have presented the move as one of adherence to global best practices without seeding awareness about what the change means for the way they prepare financial statements. In fact, there seems to be a tendency to communicate the act of adoption as a commitment to the enhancement of shareholder value and corporate governance. While improved transparency, relevance, reliability and comprehensibility are among the anticipated goods of IFRS, it is a misnomer, or worse, misleading, to imply that an accounting standard change can, by itself, create value. Value is created when firms increase their cash-generating ability, not when they change methods of reporting business performance. In this post, we discuss the importance of communicating the effects of IFRS adoption by companies on the Nigerian Stock Exchange. We use illustrative cases of companies in the EU which placed a priority on preparing the market for the new order.
On April Fool’s Day, First Bank, a foremost Nigerian bank, issued a press release stating that it had adopted the International Financial Reporting Standards (IFRS). Without prior notice, the bank stated that the change to IFRS would take immediate effect and will apply to the bank’s financial report for the year ended March 31, 2009.
And the winners are Diamond Bank, FCMB, GTBank, Intercontinental Bank, Oando and UBA: How some Nigerian companies have taken the lead in online investor relations (2).
A survey of Nigerian public company websites shows that those with dual-listings in developed country markets pay the most attention to their websites, and the investor relations section in particular. While any progress is good progress and should be applauded as such, it also raises concerns about the attitudes of Nigerian companies toward local investors. It would seem that the primary motivation for allocating the resources to create and maintain a regularly updated, information rich IR section has been the need for compliance rather than a desire to facilitate access to trading data, company performance, financing and governance information. Six companies stand apart: Oando, the integrated energy solutions group, Diamond Bank, FCMB, GTBank, Intercontinental and UBA, the financial services groups. These companies have demonstrated an impressive commitment to providing investors with easy navigation to IR content, comprehensive information and the tools to process the information. In this post, we examine the IR section of each company’s website, and proffer ways for innovation.
How do the investor relations sections of Nigerian company websites stack up against their international peers? In Part 1 of this post, we discussed the common perceptions on the value of investor relations (IR), the fundamental purpose of IR, which is disclosure and how effective IR reduces information asymetry and the cost of equity capital. In Part 2, we carry out an analysis of the websites of the six companies selected as pioneers in online IR.
And the winners are Diamond Bank, FCMB, GTBank, Intercontinental Bank, Oando and UBA: How some Nigerian companies have taken the lead in online investor relations (1).
A survey of Nigerian public company websites shows that those with dual-listings in developed country markets pay the most attention to their websites, and the investor relations section in particular. While any progress is good progress and should be applauded as such, it also raises concerns about the attitudes of Nigerian companies toward local investors. It would seem that the primary motivation for allocating the resources to create and maintain a regularly updated, information rich IR section has been the need for compliance rather than a desire to facilitate access to trading data, company performance, financing and governance information. Six companies stand apart: Oando, the integrated energy solutions group, Diamond Bank, FCMB, GTBank, Intercontinental and UBA, the financial services groups. These companies have demonstrated an impressive commitment to providing investors with easy navigation to IR content, comprehensive information and the tools to process the information. In this post, we examine the IR section of each company’s website, and proffer ways for innovation.
In the first conference call of the FCMB Group, and a first for any Nigerian company, Ladi Balogun, CEO, begun by asking his audience for bear with him if he was a ‘bit rusty’ since he was new to the medium. He assured his listeners that his performance would improve with practice.
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