Stock market investors' trading decisions are influenced by a myriad of factors, including economic, social and political changes. Their investment behaviour changes in volatile periods to adjust to the new landscape. Yet, a constant remains: investors want timely, accurate and complete information on listed issuers. How can issuers meet this expectation even in turbulent times?
Issuers have to inform the public regularly of their financial standing and immediately of any event likely to have a significant effect on the prices of the financial instruments issued by the respective company. Usually this is easy to do, thanks to clear investor relations mechanisms set up by national legislative frameworks. But there are times when issuers need to leave the limitations of the beaten path behind and find new ways to transmit the relevant information to investors.
For instance, until last year no one would have predicted that investor relations could be impacted by a health crisis. Directors and managers of listed companies needed to tackle unprecedented challenges in terms of investor relations and, more broadly, communication. Faced with the pandemic, they not only had to keep their companies afloat, but also had to handle frequent changes in the regulatory framework. Issuers needed to continuously adjust their compliance measures to reflect legislative amendments, sometimes introduced daily. They also had to properly and efficiently process information flows, to be able to convey them into relevant information for investors. In this context, the consistency and reliability of the internal and external communication was of utmost importance.
Regulatory frameworks needed to be changed to support issuers almost overnight. Mindful of the need to ensure a consistent application of European disclosure requirements, the European Securities and Markets Authority (ESMA) was prompt in providing such help. The ESMA guided listed issuers on how they should address, on an entity-specific basis, the past and expected future impact of the pandemic on the strategy, operation and financial performance of their companies.
In Romania, issuers, together with their associations and consultants, took active steps to advocate for the local legislative framework to be changed (for instance, by introducing the possibility for general meetings of shareholders to be organised remotely), so as to allow disclosure in the new landscape. Since the dawn of the "new normal", Romanian issuers have done their best to ensure proper investor relations. And these efforts continue, as previous disclosures sometimes need updating, given the case-by-case impact of the pandemic on certain issuers and its economic effects.
The lesson learned is that national legislation and corporate procedures need to allow for rapid adjustment to changes. Another example of how predicaments can contribute to positive change is the improvements in transparency, communication and public disclosures brought about in response to the pandemic. Issuers are now likely better prepared to successfully adapt to future crises.
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