Customs Street Advisors is a full service investor relations firm based in Lagos, Nigeria.

Not much attention has been paid to the role of PR agencies in the success of the Nigerian stock market in recent years. Rather, most commentators have laid emphasis on the critical role played by regulatory changes, macroeconomic conditions and the shifts in corporate financing patterns of Nigerian companies in the liftoff of equity investing among Nigerians. However, a careful look at the success of most offerings will show a tight positive correlation between the brand visibility of institutions and their success in raising capital. One may go as far as saying that during the 2004-2007 IPO wave, investor decisions on where to invest were drivrn by identity affinities. While this opportunistic approach, which was carefully planned by agencies may be faulted, when one considers the tight fundraising schedule, it was a pragmatic choice. It certainly succeeded in raising capital for companies. Without prejudice to the contributions of issuing houses and other midwifing agents, most issuers owe the success of their capital market entree to their PR agencies. Still, a sentimental investor clientele for equity offerings poses challenges for issuers. Since offering communications and promotions are scanty on past business performance, competitive dependencies, operating conditions and the economic environment, investor expectations are spread across a wide range. This complicates the inherent uncertainty of post-listing performance of the securities and results in increased volatility of the shares. To address these issues, companies need to work with experienced investor relations professionals to develop and execute market engagement strategies that match their situation so that fair valuation of their securities is achieved.

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In recent months, we have observed two interesting communication reactions among Nigerian companies to the present economic distress. The first reaction is the overly optimistic message. In this case, CEOs declare that the dire macroeconomic situation has not affected their companies, which are poised to maintain their strong growth in the foreseable future. Publicly, companies in this state of denial vigorously argue that they are immune to the downturn, while internally, they are in panic mode: slashing costs, laying off staff and cutting investment. The second type of reaction is the 'go dark syndrome', when companies just drop out of the news. In this case, these companies hold the mistaken belief that only good news is worth communicating. Taking the logic to its conclusion, since this is an inclement season, the best policy is to shut up, batten down the hatches and wait out the hurricane. When this second group does eventually deem it necessary to communicate, it does so with a terse press release or the now familar SMS messages urging receivers to ignore rumours. We believe that these reactions are counter-productive. The first, because few are fooled by the rosy picture CEOs paint in the press, and the second, because companies need to carry investors along in their plans for riding out the storm. In this post, we suggest positive steps that companies should take in developing a proactive investor communications in the downturn.

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Lively panel discussion with Wing Yu, CEO, StreetIQ, Brent Clepper, Channel Sales Director, and Scott Whitney, CEO, PodWorx on the value of podcasting in investor relations.

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Listen to Richard Wadsworth and Lois Paul of Lois Paul, as they discuss best practices for communication during initial public offerings (IPOs) with Jane McCahon and Mary Conway of Conway Communications.

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Once again, it is that time of the year when banks begin their feverish popularity contest with SMS alerts, full page ads and high street billboards announcing awards for Best This & Best That. Yet, in spite of the huge publicity these awards receive, neither the organizers nor recipients provide transparent metrics for assessing how winners emerge.

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Financial markets thrive on uniform access to information for all interested parties. When access is discriminatory it gives a significant and unfair advantage to those who enjoy such access. Such partial dissemination creates a number of severe problems. Over time, the mispricing of securities by 'non-insider' traders, who are the majority by definition, make markets less efficient due to the misallocation of resources. A second insidious effect is that when there is a widespread belief that market prices are set by those with subterranean access to non-public material information, investors tend to abandon the careful study of a company's merit, and instead allocate resources based on rumour and unverifiable expectations of excess returns at payoff. A final implication of such practices is that they compromise the integrity of those intermediaries and companies which engage in such practices, building distrust between them and investors.

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