Investor communications online: Transparent, accessible and cost-effective

By Judy Vigiletti

The SEC may be getting some bad press lately, but there is a positive legacy that they will leave in these tumultuous times—recognizing the internet as an accessible, transparent and cost-effective medium to disseminate financial disclosure to the broadest audience.

Back in August ’08, the SEC provided guidance and recommendations on making corporate websites the center for investor communications. This was the first time in nearly a decade that the SEC gave comment on corporate websites. The SEC’s recommendations indicate their belief that the website should be the critical source for institutional and retail investors to receive the data and the detail to make better investment decisions. To take it even further, the SEC says that your corporate website can, if certain criteria are met, be used as the only source of company information without violating Regulation Fair Disclosure or other securities laws.

Furthermore, as recently as December of last year, the SEC continued to promote technology by officially adopting a rule mandating XBRL filings beginning in 2009.

With this rule, the SEC is effectively mandating that all public companies submit their SEC reports in Interactive Data format, (specifically XBRL, Extensible Business Reporting Language) making it much easier to collect, manage and share financial data and information, essentially ‘bar-coding’ financial data.

Why the bold move to the internet?
Consider the benefits in terms of transparency and cost savings.

XBRL could usher in an age of transparency of public financial information. It is one of the most important changes in financial reporting since the Securities Act of 1934 and will be good news for investors, for analysts and for the financial stability and transparency on Wall Street. It’s obvious that the SEC understands the importance of democratizing financial disclosure for the average American.

But what hits home today for most companies, especially their IR and Marketing departments, is the vast cost savings that can be found.

If you’ve take the steps to make your website a recognized distribution channel and confirm that it is the main source for IR communications, you won’t have to publish press releases to satisfy Regulation FD requirements. Press Wires charge by the word, and if we do the math, an average Company could save thousands per year.

Online Annual Reports have been gaining ground in recent years for the very same reason: saving money. By moving your Annual Report onto the digital space, you can not only make the experience more interactive and easier to understand for the investor, you can eliminate the need for a glossy, printed report. Think about savings on printing and postage to the tune of $30,000 up to hundreds of thousands of dollars a year. Of course, the caveat here is that you still have to provide a printable version and mail hardcopy if it is requested. Still, the savings are extensive.

We should all laud the SEC’s embracing of technology. It’ll be a win-win in this economy.


1 Response to “Investor communications online: Transparent, accessible and cost-effective”

  1. 1 Darrell Heaps January 13, 2009 at 2:35 pm

    I just recently discovered your blog, nice work on a number of the posts.

    Couldn’t agree with you more regarding online investor communication. The SEC’s recent RegFD guideance combined with the mandating of XBRL are both significant steps in evolving corporate disclosure to be more transparent, accessible and cost-effective.

    There is certainly work to be done to ensure that these new methods and technologies are embraced by the market. For instance, on the RegFD side there are numerous steps companies have to go through to claim their web site is a recognized channel (we have a number of posts related to this on Having said that, we’re confident that innovative vendors are working hard now on new ways to make this easy for companies and think we’ll see lots of very exciting things in 2009!

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