Many shareholders world over are interested in the financial progress of corporations or companies in which they have invested their funds.
Companies, through their shareholder relations programs, are keeping these investors supplied with information about corporate financial status and future prospects.
However, many companies still do not recognize the importance of cultivating shareholders and keeping them informed. Management’s reluctance to communicate with shareholders is based on several assumptions such as:
- Shareholders are not interested in corporate affairs as long as they get regular dividends;
- Corporation affairs should not be revealed to shareholders to prevent disclosure to competitors;
- Investors receive so much information that most goes into the wastebasket unnoticed;
- Some stockholders are only interested in criticizing management;
- Few shareholders attend annual or regional stockholders meetings and are not interested in corporate operations.
Much of the apathy toward shareholders may be attributed to poor communication. Communication with the financial community is often ineffective because management does not speak effectively and information is limited and general. However, communications to investors are improving, and as a result shareholders are becoming more interested in corporate affairs.
Objectives of Shareholders Relations
The objectives of shareholders relations programs are:
- To arouse owner’s interest in the corporation.
- To create a better understanding between the company, its shareholders, and the financial community.
- To persuade stockholders to consume and recommend the purchase of products of the corporations.
- To reduce the turnover of shareholders and promote holding of stock as a long-term investment.
- To reduce stockholders criticism and organized opposition to management; to stabilize the market for corporate securities.
- To raise the prestige of a corporation in the eyes of the community by enhancing its standing among its owners.
- To win the allegiance of stockholders to ensure operating control by management.
- To secure support of shareholders as a source of new capital; to champion free enterprise with stockholders.
- To create new investors interest and raise additional capital;
- To secure favourable recommendation of company securities by investment counsellors and security analysts.
- To gain shareholder support for community relations projects.