I attended an investment conference recently and asked institutional investors how they obtained information on listed companies in Africa. The response was that they just called the management and asked the questions they wanted like, just before the release of the annual results or interim results, ”are there going to be any surprises?” They receive the response they want most of the time and thats that. The same can be said for other material information requests.
Yes there are two levels of information generally and with regulation of this sort of thing being poor, the opportunity presented to directors of listed companies who do take their communications obligations seriously are significant. As an institutional investor extracting non-public material information from a listed company and having just put down the phone to the investee company, would you not think to yourself “what has management told other investors that they have not told me”.
The issue for listed companies in Africa is to adopt a disclosure policy, apply it, tell the investment community and show tangible evidence of this. This is the way to enhanced reputation and reducing the perception from the investment community that there might be a few surprises. The result: a lower discount rate as one percentage point is removed for consistent, reliable, transparent and meaningful financial reporting.
What does the heading of this blog have to do with this? In order for information to be deemed to be in the public domain it has to be available on an immediate, non-exclusionary and broad basis. Namely a newswire service post, submission to the stock exchange, or a webcast. Forget newswires and webcasts in Africa for the moment – how gooder job do the stock exchanges do – just check out the websites and see how many products are available for investors to receive news immediately. Very few.
This is an opportunity for listed companies.