ICR’s “Taking Stock of Communications” Survey: Majority of Professional Investors Say Non-Financial Factors Play a Critical Role in Company Valuation

80% of investors believe at least 20% of a Company’s valuation is impacted by non-financial factors

Four in Five professional investors (80%) believe that at least 20% of a company’s valuation is impacted by non-financial factors, and more than half (57%) believe it’s at least 30%. These are among the findings of the 2022 Taking Stock of Communications survey, conducted by PRWeek on behalf of ICR, one of the top 20 ¹strategic communications and advisory firms in the world.

Interestingly, the survey found that communications professionals (e.g. investor relations officers, corporate communications and marketing executives), whose expertise it is to help clarify and amplify financial results, actually underestimate the value of non-financial factors by about 10 percent. When compared to the professional investors, seven in ten communications professionals polled (71%) believe that at least 20% of a company’s valuation is impacted by non-financial factors, while less than half (45%) believe it’s at least 30%.

“ICR has always operated with a core belief in the importance of managing what we call the ‘Perception Quotient’ and this survey validates our thesis,” said Tom Ryan, Founder and CEO, ICR. “While the long-term correlation between financial performance and share price is undeniable, in any given period – one quarter, one year, or even five years – as much as one-third of a company’s value and reputation can be attributed to a long list on non-tangible, non-financial factors.”

Overall, when asked how much value specific non-financial factors impact investor perception of a company’s valuation, “perceived credibility of management team” ranked highest (84%), followed by a “clearly articulated strategy and business plan” (81%) and “quality of communication” (76%). It’s worth noting that “quantity of communication” was identified as the least important factor (20%).

“The quality and presentation of a company’s narrative to complement the numbers is a critical driver of a company’s equity value,” added Mr. Ryan, who was also a sell-side analyst on Wall Street for a decade. “Creating context around the numbers can come in several ways, such as providing thoughtful quarterly commentary, delivering insightful answers to tough questions, and articulating the growth story through business and financial media.”

Related to third-party sources of company news and information, business and financial media remains very influential on the decisions that investors make, with 85% of survey respondents identifying both Bloomberg News and The Wall Street Journal as the most relevant outlets.

Beyond traditional media, more than half of respondents (54%) said social media is deemed to have a material impact on investment decisions, ranking Twitter (64%) and LinkedIn (59%) as the most effective to communicate with investors. Similar to viewpoints related to non-financial factors, a higher percentage of professional investors (66%) than communications professionals (49%) feel social media is impactful, suggesting the latter may not be giving it enough focus in this regard.

In addition, this survey revealed large gaps between how comms professionals rate their investor-focused communications compared to how professional investors rate them. When asked to judge their effectiveness across seven criteria², communications professionals rated themselves either “excellent” or “good” between 25% and 44.9% higher than professional investors did. The important takeaway is that investors have a different perspective than most traditional audiences and it is critical to fully understand their perspective, the communication that resonates and how best to deliver it.

About the Survey Methodology:

The 2022 Taking Stock of Communications survey was conducted between February 3 and March 11, 2022 by PRWeek on behalf of ICR. The survey enlisted more than 100 U.S.-based professionals comprising senior-level PR, marketing and IR officers, as well as securities analysts, institutional investors and independent investors.

About ICR

Established in 1998, ICR partners with its clients to execute strategic communications and advisory programs that achieve business goals, build awareness and credibility, and enhance long-term enterprise value. The firm’s highly-differentiated service model, which pairs capital markets veterans with senior communications professionals, brings deep sector knowledge and relationships to approximately 1,000 clients across more than 20 industry groups. ICR’s healthcare practice operates under the Westwicke brand (www.westwicke.com). Today, ICR is one of the largest and most experienced independent communications and advisory firms in North America, maintaining offices in New York, Norwalk, Boston, Baltimore and Beijing. Learn more at www.icrinc.com. Follow us on Twitter at @ICRPR.

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