An explanatory study of the use of e-mail investor communication by South African listed companies
Date
2016-12-01
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
AOSIS Publishing
Abstract
Background: Although research shows that almost all listed companies have corporate
websites with dedicated investor relations (IR) sections that enable companies to ‘push’
information to investors, it was argued that such an asymmetrical approach to communication
is insufficient for companies wishing to exercise good IR. The purpose of this study was to test
the effectiveness of the Internet to act as a mechanism to achieve more interactive communication
between companies and investors.
Objectives: The objectives of the study were to measure the responsiveness, timeliness and
relevance of companies’ responses to e-mail requests, and to test for the determinants (size,
market-to-book ratio, profitability, leverage and liquidity) thereof.
Method: The mystery investor approach and a content analysis were used to study the e-mail
handling performance of companies. The associations between company-specific characteristics
were statistically tested.
Results: It was found that the e-mail handling performance of companies in this study was
poor compared with previous studies. Significant relationships between company size and
responsiveness and relevance, and between market-to-book ratio and relevance were reported,
as well as between the contact method used to request information and relevance and the use
of social media and timeliness.
Conclusion: Specific areas where companies could improve their investor communications
were identified. The need for further research was discussed to explain some of the relationships
found, as well as those not found, in contrast to what was expected. Future research is warranted
to examine the relationship between the e-mail handling performance of companies and
information asymmetry and the cost of equity of companies.
Description
CITATION: Baard, R. & Nel, G. 2016. An explanatory study of the use of e-mail investor communication by South African listed companies. South African Journal of Information Management, 18(1), a743, doi:10.4102/sajim.v18i1.743.
The original publication is available at http://www.sajim.co.za
The original publication is available at http://www.sajim.co.za
Keywords
Corporations -- Investor relations, Business communication, Internet -- South Africa, Online financial reporting, Financial statements -- Computer network resources, Electronic mail messages
Citation
Baard, R. & Nel, G. 2016. An explanatory study of the use of e-mail investor communication by South African listed companies. South African Journal of Information Management, 18(1), a743, doi:10.4102/sajim.v18i1.743.