1. Financial Communication Summit in Berlin

What is the strategic importance of Investor Relations/Financial Communication? How pronounced is the strategic management of Investor Relations? Which strategies of Financial Communication and Investor Relations can be distinguished – and what are the advantages and disadvantages? These questions were answered within the research project conducted by the Center for Research in Financial Communication by Prof. Dr. Christian Hoffmann and Sandra Tietz. Experts responsible for Investor Relations and Financial Communication (Corporate Communications) of the 160 largest listed German companies were surveyed.

Institutional investors are the largest investor group in Germany as well as around the world. Investor Relations departments are therefore in continuous contact with a large number of current and potential institutional investors – and also Financial Communication has dedicated considerable attention to this group. But what are the expectations of these shareholders in the capital market communication of companies – especially with regards to Corporate Governance?

Tim Albrecht (DWS) and Mahesh Jayakumar (State Street Global Advisors), two representatives of major institutional investors, talked about how investment decisions are made within their teams and what internal and external information is used. In addition, Prof. Dr. Katja Langenbucher (Goethe-University Frankfurt) gave an insight into the legal framework in which investors ‘transparency requirements are met with companies’ obligation to provide information.

One of the key issues was the growing importance of passive versus actively managed funds. Although it was assumed that companies would have little opportunity to interact, it was revealed how intensively passive funds deal with the portfolio companies. Under the term “asset stewardship” initiatives by the investors were discussed, as well as approaches for the capital market communication of companies.

The focus of the discussion was on the importance of ESG factors (environmental, social & good governance); especially how these are included in the investment process. According to unanimous opinion, “G”, i.e. good governance, is the most important factor. Positive values ​​for “S” and “E” would often result from this. The scope of governance aspects discussed ranged from the independence, experience and also the “refreshment” of the executive board to the use of preference and ordinary shares. With regard to the ESG factors, companies are confronted with a variety of different transparency expectations, so the comments on initial initiatives to standardize these factors were welcomed by the panel.

The tone in the capital market is getting rougher: Shareholder activists (active or aggressive minority shareholders) are increasingly pushing companies to sell certain parts of the company, to realign the strategy or change their management. The second panel therefore raised the question of how companies should react to and prepare for shareholder activism – and which communicative strategies are promising.

First, Prof. Dr. Katja Langenbucher (Goethe-University Frankfurt) discussed the different motives and the instruments available for activist investors in German stock corporation law. Winnie Lerner (Finsbury) added her experience with activist shareholders in the US, where companies have been dealing with the issue for many years.

Christoph Sieder (ABB Group) gave an insight into the experiences of his company with active shareholder last year. In the process, Corporate Communications and Investor Relations had played a central role, by providing clarification and intensifying cooperation with existing investors. In addition, the opportunity to improve the set-up and overall quality of communication was exploited.

Finally, the main topic of the discussion was whether and how companies can prepare for shareholder activism. The central principles is to take activist shareholders very seriously, as their professional public campaigns can put a lot of pressure on the management. The analysis of the activists are so detailed that they can be used by companies as “free consultancy” in order to understand their vulnerabilities. In addition to an analysis of who is a friend or a foe of the company, the panel shared a variety of preparatory possibilities with the company’s representatives.