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Modern corporate communications

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Trends in financial communications. …

Trends in financial communications.


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  • 1. Communicating Business Agenda to Investment Community Sahala Sianipar Managing Director, Corporate/Financial Practice, Asia Pacific Burson-Marsteller Twitter: @ssahala Singapore, 26 September 2011
  • 2. Content Trends in financial communications Developing financial communications plan Discussion BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS
  • 3. Trends in Financial Communications
  • 4. Asia Pacific as Global Capital Raising Centers US$53 Billion raised via IPO in Hong Kong Stock Exchange in 2010 (FinancialPictures courtesy of www.bloomberg.com Times, 2011) BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS
  • 5. Asia Pacific Companies Influence Global Merger & Acquisition Top Target Countries by Volume 2010 (US$ billion) Source: Bloomberg 37.21 65.57 110.31 35.12 84.07 China Hong Kong Australia Japan USBloomberg 2011 M&A Outlook Report: 2010: 8,700+ deals announced worth US$594 billion Highest M&A activity in financial industry Largest deal by Asian company was Bharti Airtel’s purchase of Zain Africa (US$10.7 billion) BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS
  • 6. Active Buying by Asia Pacific Companies in 2011 Where active buyers are expected in 2011? Source: Bloomberg Poll (2010) 7%3% 7% Asia Pacific Central Asia 45% North America South & Central America 22% Western Europe Affrica & Middle East 13% BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS
  • 7. Transparency DemandPicture: www.thedailybeast.com BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS
  • 8. Real Time and Multiple Channels BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS
  • 9. Case Study BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS
  • 10. Rapid Evolution of Issue into Crisis  It is more difficult to plan for a crisis given the changing communications landscape Source: Burson-Marsteller & Penn Schoen Berland Global Crisis Preparedness Survey 2011 50% Global 37% 35% 31% 29% 25%Need to respond Overall challenges More globalized Increased public Increased anti- Rise of citizenextremely quickly of digital nature of demand for corporate journalism / social communications communications transparency sentiment in public media (e.g. and/or media Facebook, Twitter) BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS
  • 11. Asia Pacific Companies Likely to Encounter Crisis Source: Burson-Marsteller & Penn Schoen Berland Global Crisis Preparedness Survey 2011 67% 59% 61% 55% 46% GLOBAL APAC EU US LATAM Have experienced a crisis BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS
  • 12. Impact of Trends Understand Asia Pacific, its diverse constituents and influencers as well as operating landscape Connect the dots – global and locally Invest to align internal and external communications that support business objectives BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS
  • 13. Developing Credible Financial Communications Plan
  • 14.  “A corporation managed by responsible managers will be a responsible corporation; a corporation managed by irresponsible managers will be an irresponsible corporation. It is individuals who are responsible for what corporations do.” Harold Burson Founder Chairman, Burson-Marsteller November 2008 BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS
  • 15. Financial Communications Plan – An Overview Define your objectives that are aligned with corporate/business objectives List core/priority stakeholders and influencers Develop messages Identify communications channels Define monitoring approach & tools Identify issue or crisis triggers related to your company and industry BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS
  • 16. Issues MappingRegulatory Stakeholders & Influencers Business competition  Regulators Environmental compliance  Customers Business permits  Investment community Foreign investment  Market commentators/analysts Compliance  Local community  Traditional mediaOperational  Bloggers/online influencers Service quality Reputational Data security  Global/local corporate reputation Business partner  Product reputation Employee relations  Stakeholders’ knowledge of the company Transparency  Corporate responsibility commitment Business competition  Disclosure BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS
  • 17. Case Study Situation Analysis • A state agency claimed that a major listed bank in Indonesia did not exercise prudent banking when it disbursed loans to several companies • Loans were fully collateralized and companies were affected by 1997/98 financial crisis, which required debt restructuring • The report by the state agency also claimed that the bank’s senior management never reported these loans to its shareholders • The report was leaked to a couple of first-tier local media, which generated headlines even by Jakarta-based international media • The government launched an investigation and subsequently criminal charges against senior management of the bank • The bank’s institutional investors were concerned and rating agencies were about to issue updated ratings of the bank’s papers. BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS
  • 18. Case Study – cont’d Integrated approach to investor and stakeholder communications • The bank quickly updated its institutional shareholders on the situation • The bank pointed to its information memorandum prior to its listing that provided details of the bank’s exposure to the various companies mentioned in the report • In other words, the bank had been transparent all along and the report did not provide any new information that investors had not known • The bank assured its key customers of its financial and operational soundness as it had set aside sufficient and conservative provision for those loans • The bank also reached out to its key controlling shareholders that in turn, provided public backing of the bank’s strategy and its ability to handle the situation • The bank disseminated regular updates to media (domestic and international), which were tracked by the investment community • Employees of the bank were regularly updated of the management’s action to address the situation. BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS
  • 19. Case Study – cont’d Results • Whilst the bank’s stock price was down, no major institutional depositors/customers withdrew funds from the bank • S&P affirmed its ratings of the bank’s papers despite the public controversy in Indonesia • Institutional investors recognized there could be other motivations from the charges against the bank • Key shareholders of the bank also publicly spoke in support of the bank. BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS
  • 20. Case Study (2) Situation Analysis • A major Asian telecommunications company that is listed in the New York Stock Exchange was accused of committing irregular derivative transactions • The allegation was raised by a politician in a parliamentarian hearing involving senior government ministers and chairperson of the capital market supervisory board • First-tier national and international newswires immediately picked up the story, which became headlines • Sell-side analysts called the company to seek clarification • Institutional investors questioned the company’s transparency, risk management and good corporate governance practices • At the same time, the politician threatened to file a criminal lawsuit against the company. BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS
  • 21. Case Study (2) – cont’d Rapid response and integrated approach to investor and stakeholder communications • The objective of the communications program was to protect the level of stakeholders’ trust on the company • Core stakeholders included regulators, business customers, shareholders & investors around the globe, and employees • Company highlighted its disclosure compliance as required by the US Securities Exchange Commission in its regular filings • Company’s executives reached out and briefed capital market supervisory board, industry regulators, investment community (sell and buy-side analysts, rating agencies), media (domestic and international) and influencers (e.g. think tanks) regarding the company’s derivative policy, which had been instituted and disclosed regularly • At the same time, the Company issued regular statements via multiple channels (online, website, traditional media) to correct earlier media reports. BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS
  • 22. Case Study (2) – cont’d Results • Chairman of the capital market supervisory board issued a statement that cleared the company from the allegation; the chairman also spoke in front of members of the national parliament • Investors were satisfied with the explanation that the share price did not suffer from major decline • Third parties such as research analysts and industry commentators published articles in leading local media supportive of the company’s risk management, disclosure and good governance practices. BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS
  • 23. In Summary  Asia Pacific companies are expected to be more active in regional and international trade & investment  Stakeholders including investors will demand more on good corporate governance, disclosure, and transparency from companies  U – Understand your financial communications goals and stakeholders in Asia Pacific  C – Be able to connect the dots, globally and locally in today’s digital age  I – Be prepared to invest in aligning internal and external communications capability including crisis preparedness and monitoring tools.
  • 24. THANK YOU