The investor relations professionals play a key role in the communication process between companies and the market. These professionals are gaining prominence within companies, within the context of the growing appreciation of good governance practices – among which includes clear, comprehensive and timely communication of events which affect or may affect the life of corporations.

The advances are impressive, but, as in any process of evolution, there are aspects that can be improved. Here we align some suggestions – due to our observation and the experience reported by other investment analysts – with a view to increasing the efficiency of communication between companies and the market.

1) It is essential that the areas of investor relations professionals are exclusively dedicated to it.

2) Constant changes of management are not welcome.

3) If a top executive, important for the company’s relationship with the market, steps down, place as soon as possible another professional temporarily in the post and do not take much time to hire a replacement.

4) There are never too many announcements.  Even for the less important (but useful for analysis) news, they are an excellent tool for communication with the market.

5) Press and relevant facts must be clear, detailed and contain the most significant data, preferably with as much financial information as possible subject to disclosure:

• in case of quarterly results, always include the analysis of numbers compared to the previous quarter and the same quarter of last year;
• comment always on the reasons for relevant variations in the items because there is nothing worse than saying, for example, that certain costs increased by 30% and there is no explanation why;
• always if possible, avoid changing the break-down of data – it is uncomfortable for the analyst to be obliged to adjust his models because the company frequently changes the way it presents its figures.

6) Make presentations in Brazil and abroad. Given the vast range of alternatives that managers have at their disposal, it is good that the company is always there to remind them of the investment opportunity that its shares represent. Meetings should follow strict guidelines in order not to provide inside information to small groups of analysts and investors.

7) The company transmits confidence to the investor when it has clear dividend and share repurchase policies.

8) Contact with analysts must be frequent, keeping the areas of investor relations monitoring reports, recommendations and estimates.  It is admissible to try to “correct” misunderstandings and distortions of projections, and be aware of why a particular analyst is more or less optimistic about the company and its shares.

9) Guidances on the results are welcome, but beware of the guidance which may not turn out to be accurate. It is preferable to provide accurate guidance instead of very optimistic expectations that cannot be reached.

10) The company must have a constant presence in market events.

11) Perform quarterly results conference calls. These calls should not happen on the same day of the announcement of results, so that stakeholders can take time to analyze the numbers published.

12) Hold conference calls whenever a relevant topic comes up – in case of an acquisition, sale, supply, fusion, etc.. -, basing them with the greatest possible number of financial data.

13) The investor relations websites should be easy to navigate and provide ALL of the press releases already disclosed by the company to facilitate the search of historical data.

14) Relevant facts should be disclosed only after the hours of trading, preferably at the end of the day, to give investors time to “digest” the news and do math.

15) Visits to sites/factories should be more frequent.

16) Companies have often failed in communicating certain aspects of governance: composition and minority representation on the board; specific points of the bylaws, among others.

17) Some companies favor the foreign investor, unnecessarily leaving the local investor in the background.

18) Attendance does not necessarily imply effectiveness. Companies that have frequent contact with analysts sometimes surprise the market with unexpected results.

This list is meant only to make a modest contribution to the improvement of relations between companies and investors and investment professionals. The more fluid, functional and efficient are these contacts, the better for those involved and for our capital market.