10 / 48
THE NEEDLE WITHOUT THE HAYSTACK
TRANSPARENT CAPITAL MARKET COMMUNICATION IN TIMES OF
INFORMATION OVERLOAD CANNOT MEAN: YET EVEN MORE. INSTEAD ANNUAL REPORTS MUST
BECOME MORE FOCUSED.
By
RALF THOMAS
, CFO Siemens Group, Munich, Germany, from Frankfurter Allgemeine Zeitung, Frankfurt am Main,
Germany, April 11, 2016
Baron Fürstenberg was not right with his famous saying:
Shareholders are neither “stupid” nor “insolent”. They are
intelligent, they know their rights and they have access to
a large number of information sources. Companies have
to draw the attention of investors and not vice versa. This
is becoming increasingly difficult.
Digitalization has not only brought about an excess supply
of music, pictures and films, but also of information about
companies. Investors are facing the same endless choices
as music or cinema lovers. The question is no longer:
“How and when do I get the necessary information?”,
but rather: “To which information do I have to direct my
attention, and which one can I trust?”
At the same time, studies show that the attention span
of humans keeps getting shorter while the volume
of information is steadily increasing. Against this
background, both, the standard setters, which determine
how much information companies have to provide, and
the companies must ensure transparency for the users of
information. Capital market information must be, today
and in the future, first of all clear and distinct, easily
understandable and suitable for the target group. But it is
not only on the users of the information to sift out from
the abundance of information what is relevant to them.
Just as much and more than ever before, the issuers of
information, too, have to communicate in a form that
suits the needs of the users.
To do so, companies today use a large number of
instruments. Those days are long gone when investors
depended once per year on the annual report which
served for them as the main source of information for
their investment decisions. By now, there is a constant
flow of information, providing investors, analysts and
journalists with a large number of comprehensive
packages of corporate information around the clock.
As a consequence, the role of annual reports has also
changed. While the report was one – if not even the
central – building block of capital market communication
in the past, today it is only one among many instruments.
Despite this change, the volume of annual reports of
many companies has significantly increased over the
last years. The reasons for this development reach from
a large number of new regulatory requirements – which
have been issued in connection with various crises of
companies, economies and the financial system – to the
attempt to address a spectrum of recipients that is as
broad as possible with one report only. The consequence:
for the users it is becoming increasingly difficult to
10
GERMANY