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Immaterial possessions are being appreciated

At the end of January 2010, the Dutch paper ‘Financiële Dagblad’ published an interesting article. Erik Roelofsen, working for PricewaterhouseCoopers and connected to the Rotterdam School of Management, has been promoted for the following phenomenon: ‘Providing information for analysts by means of conference calls'. For the publication of the quarter and annual figures of companies listed on the stock exchange, a conference call for analysts is often organized nowadays. During such phone meetings, they get the opportunity to interrogate the company’s directors. In America, these calls are even mandatory and have to be made public. If you are interested to listen to such a call, you can do it on the company’s corporate websites, mostly by choosing the option 'investor relations'.

What did Roelofsen prove? He discovered that during such a conference call, analysts start asking questions about the company’s shares. To discover this, Roelofsen compared the broadcast time and the exchange rates graphs. However, his research only becomes really interesting when he proves that, during conference calls, the analysts are especially interested in the company’s immaterial elements. Which questions do the analysts ask? How does the company deal with its own culture? How does the company deal with the development of its own leadership? What does the company invest to further develop the competences of its own employees? To put it briefly, it appears that analysts ask for immaterial information, instead of material information. And it is even more interesting to learn that analysts start acting immediately on the basis of the answers they receive to their questions. Consequently, the ‘soft’ information of a company appears to have a though and direct impact on its global value. This is interesting. Whereas we used to work according to a very rational company model from the eighties till the beginning of the 21st century, we now seem to evolve more and more towards the appreciation of the immaterial ‘possessions’ of an organization. This is not only realized by means of 'lip service' or 'window dressing', but directly by means of the total financial appreciation of a company.

I am optimistic about this development, because companies shouldn’t live next to society, but in the middle of it. A company is much more than the sum of its turnover, profit and growth. According to my brother-in-law, who is working in the financial world, ‘the trend is your friend’. And this trend is good!

Paul

By Paul Donkers

"my purpose is to help improve strategy execution, to create high performing teams and coach for effective business leaders"

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