An exploration of the online investor relations (IR) practices of companies listed on the Johannesburg Stock Exchange (JSE)

Abstract

Prior research has found that having better investor relations (IR) practices contributes towards improved share prices, liquidity of shares and analyst following. The main aim of this study was to determine the extent to which JSE-listed companies comply with international best practice guidelines for IR practices via the company's website. A secondary objective was to arrive at an opinion regarding the stage of internet adoption for IR practices in which JSE-listed companies find themselves, based on Hedlin's (1999) three-stage model. A checklist of 201 items was used to assess the websites of 205 JSE-listed companies from the beginning of July to mid-September 2012. The average online IR score for all 205 companies was found to be disappointing, although the top 100 companies in South Africa performed better than companies in other emerging and developing economies, but worse than companies in advanced economies, where size is probably the main differentiator. Bandwidth is also a constraining factor for online IR quality in South Africa. We conclude that instead of moving towards stage III (HTML, video and audio) of Hedlin's model (1999), JSElisted companies still seem to find themselves in stage II (paper-equivalent PDF's). This should concern Chief Financial Officers (CFOs), as effective and efficient communication with investors could contribute towards attaining optimal share prices and improved liquidity and analyst following.

The development of a measurement instrument to measure the quality of internet investor relations

“…To assist future research, some of the decisions that were made in conducting the content analysis is discussed. Finally, Esterhuyse and Wingard's (2016) contribution is discussed.…”

“…Esterhuyse and Wingard (2016) used a measurement instrument consisting of 201 items to assess the websites of 205 JSE-listed companies during the course of 2012. A separate discussion of the Esterhuyse and Wingard (2016) study is justified, but to ease comparison with the current study, is discussed near the end of this article.…”

“…Esterhuyse and Wingard (2016) used a measurement instrument consisting of 201 items to assess the websites of 205 JSE-listed companies during the course of 2012. A separate discussion of the Esterhuyse and Wingard (2016) study is justified, but to ease comparison with the current study, is discussed near the end of this article. Table 1 summarises the literature that has examined corporate websites as disclosure vehicle according to: (1) the number of attributes measured; (2) the use of weights; (3) whether a distinction is made between quantity as opposed to the quality of IIR; and (4) whether the results of reliability and validity tests were reported.…”

“…From an analysis of the categories used by Esterhuyse and Wingard (2016), it is clear that their study focused on usability, financial information and shareholder information. The usability focus was probably the result of the use of the Nielsen Norman usability guidelines.…”

“…Granting that usability is extremely important, the current study argues that a valid measurement of investor relations should include attributes such as relevant news, investment case, bondholder information, corporate governance and corporate responsibility. Esterhuyse and Wingard (2016) further assessed all attributes as either available or absent, has used weights to emphasise the importance of presentation attributes and failed to report on any reliability or validity assessments.…”