Home > Uncategorized > Websites Finally are Recognized as Primary Point of Disclosure for Public Trade Companies

Websites Finally are Recognized as Primary Point of Disclosure for Public Trade Companies

Did you know that the investor relations websites were only recognized as main point or disclosure after 2008? That’s right, the U.S. Securities and Exchange Commission (SEC), the government regulator for publicly traded companies, released a guidance on August 7, 2008 informing corporations that they could use their websites as main distribution channel (click here to see press release). One of their studies showed that approximately 80% of retail investors now have access to the internet in their homes and accordingly to Thomson Reuters, 75% of institutional investors access investor relations (IR) websites weekly or more often. So after many years the SEC finally accepted that the web has transformed how business communicates and how audiences’ access information.

 Previous to 2008, companies had to disseminate their regulatory press releases though a wire provider (PR Newswire, Business Wire, Market Wire, etc) in order to be in compliance with all regulations. Under this old model, companies had to send press releases to a wire provider, SEC and regulatory agencies, then the wire provider formatted and distributed the final release to news bureaus, media and financial sites and aggregators, who then distributed it to the IR websites. Finally the last place where press releases were available was on the company’s own website. With this, we can see that corporations didn’t have control over the dissemination process and was a very time-consuming process.

Now with the new guidance, companies can have more control over the creation and distribution of their releases and how and when to communicate.  Thus, they can eliminate the need to coordinate last minute changes with third parties (wire providers).

NYSE Euronext states “We think the Web disclosure model provides an efficient way for issuers to enhance the disclosure process. This new model shifts the value to issuers from the dissemination of the information to the message analytics around the response to that information.”

Do you think that after all these changes public companies have been really using their websites as primary point of disclosure? Well, unfortunately they have not. Despite the SEC guidance and the support of NYSE and Nasdaq they’ve under utilize the web up till now with just a few companies taking advantage of this new way to reach audiences. It seems that investor relations, public relations and communications departments of companies have not adopted these tools as quickly as we think. Only a few companies such as Google, BGC Partners, Expedia, Marathon Oil, Reis, Tellabs,  to mention some of them, have taken the initiative. Obviously these numbers have been growing gradually but we have seen a substantial increase during 2010 and we are hoping to see that for the last trimester of this year finally this number will rise faster.

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