Skip to main content
main-content

Über dieses Buch

Investor Relations for the Emerging Company provides enduring advice, insight, and procedures that will help companies communicate, legally and ethically, their commitment to enhancing shareholder value. This revised edition updates Sarbanes-Oxley; Frank-Dodd act and new governance regulations.

Inhaltsverzeichnis

Frontmatter

The Investor Universe

Frontmatter

Chapter 1. Pep Talk

Abstract
All emerging public companies share a common goal: rapid and sustainable growth in shareholder equity. This book is intended to describe to emerging public companies how to communicate their commitment to that goal in a manner that is honest, ethical, and legal.
Ralph A. Rieves, John Lefebvre

Chapter 2. The Growth Challenge

Abstract
We were reluctant to revise the first edition of this book. The Sarbanes-Oxley Act (SOX) has been studied and critiqued as extensively as any legislative act that has impacted business practices. We felt that we couldn’t add any comments of consequence to what had been written about SOX. However, in 2012, TD Ameritrade introduced a smart phone app that allows investors to scan UPC bar codes on any product and instantly get stock information about the company that made it. After learning that, we were no longer ambivalent about undertaking this revision.
Ralph A. Rieves, John Lefebvre

Chapter 3. Modern Investing Theories and Practices

Abstract
The eminent financial historian Peter L. Bernstein once stated with his customary elegance:
Investing is a process of making decisions today whose results will not be known until tomorrow. Nobody knows what tomorrow will bring, because nobody can control everything that is going to happen tomorrow. The overarching reality, the launching pad from which investment theory takes off, is that being wrong on occasion is inescapable, even for people who are very smart. The subject matter of investment theory, then, is about how best to manage our affairs in the face of that disagreeable reality.1
Ralph A. Rieves, John Lefebvre

Chapter 4. The Securities Markets

Abstract
The structures of the markets in which securities trade has changed and is changing—for the better. These changes facilitate the movement of capital and speed up the movement of information, thus enhancing the measurement of risk. The numeric term 24/7 was introduced just in the past century. It is understood throughout the global markets as the new paradigm for the capital markets: 24 hours of trading, 7 days a week. All these changes have created wider opportunity for price transparency and better execution of transactions. Better execution enhances that feature of capital markets about which you should be most mindful: liquidity.
Ralph A. Rieves, John Lefebvre

Chapter 5. Reaching the Individual Investor

Abstract
There are fewer and fewer individual shareholders among the prospective investors in your company. That is because people have become more aware of specific risk (chapter 2) and of the wisdom of diversification through mutual funds. There are, however, some individuals who still want to manage all aspects of their financial activities. These individual investors buy stocks in small lots and generally are less sophisticated than institutional investors. They are the most likely shareholders to generate complaints.
Ralph A. Rieves, John Lefebvre

Chapter 6. Targeting Institutional Investors: The Microcap Funds

Abstract
Chapter 5 describes some of the theories and practices that experienced individual investors use in developing an investment strategy. The purpose of this chapter is to describe investors who have the objective of buying thousands of shares of emerging companies’ stocks. This selectively targeted group is part of the largest and most important segment of the investing world, the institutional investor community.
Ralph A. Rieves, John Lefebvre

Chapter 7. About Consensus Risk

Abstract
Consensus risk refers to the risk of the market value of your company’s stock being determined by the collective, and sometimes capricious, opinion of a majority of analysts and institutional investors. Our discussion of consensus risk can best be followed if you keep in mind the fact that when you are wrong about something and so is everybody else, you won’t get much blame.
Ralph A. Rieves, John Lefebvre

Governance and Disclosure

Frontmatter

Chapter 8. Governance: The Investment Manager’s Perspective

Abstract
Governance is leadership. It is not just about compliance. Professional investors presuppose your compliance with SEC rules, just as they presuppose your compliance with the laws of other agencies and regulatory bodies. If your company is not in compliance with any regulations, it won’t have any appeal to professional investors.
Ralph A. Rieves, John Lefebvre

Chapter 9. Governance: Regulation FD

Abstract
One more time: Governance is leadership. One important characteristic of corporate leadership is the manner in which management discloses financial information. Emerging companies are correctly perceived as riskier than larger-cap stocks. The only way for your company to mitigate that perception is to demonstrate a fierce commitment to full disclosure.
Ralph A. Rieves, John Lefebvre

Chapter 10. Governance: Sarbanes-Oxley and Dodd-Frank

Abstract
In the previous chapter we discussed two Reg FD issues in the context of interrogatives: The issue of materiality was characterized as a question of what. The issue of timely public dissemination was characterized as a question of when.
Ralph A. Rieves, John Lefebvre

Chapter 11. Governance: Shareholder Activists and “Rightful Concerns”

Abstract
Experienced financial analysts will consider the value of a corporation’s intangibles, such as trademarks, R&D practices, employee training programs, and governance policies. It has become standard practice to consider intangibles in valuation. Analysts acknowledge that such intangibles cannot be valued like fixed assets; however, analysts can defend including intangibles in a research report.
Ralph A. Rieves, John Lefebvre

Chapter 12. The SEC and Financial Reporting

Abstract
The Securities and Exchange Commission (SEC) is a federal agency established by the Securities Exchange Act of 1934. That act is a keystone in the regulation of securities markets and outlines the powers of the SEC to interpret, supervise, and enforce federal securities laws, principally those prohibiting fraud. The SEC has the authority to bring administrative proceedings against firms and persons the agency believes are violating securities laws; however, allegations of criminal violations of these laws are prosecuted by the Justice Department. The functions of the SEC should be considered quasi-judicial in nature because appeals from its decisions can be taken to federal courts. Figure 12.1 is an organizational chart of the SEC.
Ralph A. Rieves, John Lefebvre

Corporate Practices for Effective Investor Relations

Frontmatter

Chapter 13. Establishing an Investor Relations Program

Abstract
Conducting IR activities within emerging corporations does not require establishing and staffing a distinct investor relations department. IR functions can be handled by the CFO, the retained legal counsel, and a contracted IR advisor. You do need a program to inform investors and shareholders about how you are increasing value for shareholders. And your finance department may need some advice about distribution of 10-Q and 10-K reports as well as appropriate means by which to disclose material developments. Those information and disclosure activities can be coordinated with your finance department by an experienced IR advisor.
Ralph A. Rieves, John Lefebvre

Chapter 14. Best Practices for News Releases

Abstract
The rate at which communications technology changes precludes discussion of the most efficient or effective channels or media through which a company distributes its news. This chapter’s focus is on the preparation, content, and formatting of news releases.
Ralph A. Rieves, John Lefebvre

Chapter 15. Best Practices for Conference Calls and Presentations

Abstract
Not surprisingly, printed information does not have as immediate an impact on the price of your stock as oral communication has. Even less surprising is that conversations or personal presentations to limited audiences are the most likely opportunities for getting into disclosure trouble. Do not disclose material information for the first time to limited audiences! You cannot be too vigilant about this. Analysts, experienced investors, and reporters are masters at prompting you to divulge everything that is material or could soon be material. They are not violating any regulations by asking questions. The aggravation they may exhibit when you cite Reg FD pales in comparison to the response you will get from the SEC for improper disclosure. Be ever mindful. When in doubt, KYMS.
Ralph A. Rieves, John Lefebvre

Chapter 16. Best Practices for Using the Net: Confronting the Chat Room Pox

Abstract
In chapter 5, we advised you to be vigilant about “pump and dump” schemes. With the internet these schemes can be implemented easily by unscrupulous brokers and criminals using chat rooms and message boards. Just as insidious are the dialogues in chat rooms and on message boards where the goal may not be chicanery but just passing on unattributed gossip. Some of this “stuff” (our editor’s more delicate ‘s’ word) may not be part of a “pump and dump” operation. Nevertheless, inaccurate information gets out there and can be critically wounding to your company’s reputation.
Ralph A. Rieves, John Lefebvre

Chapter 17. Conclusion

Abstract
This book is intended to guide you in your efforts to increase value of your company’s common stock. The focus has been on how the securities markets really work and how the markets appraise the value of your company’s equity. What follows is a summary of the key concepts presented in this book:
1.
The common stocks of emerging public companies are appealing investments because there is a greater likelihood of a faster rate of earnings growth.
 
2.
Microcap stocks have higher return premiums because microcap stocks are perceived as riskier investments than stocks with greater capitalization.
 
3.
Shareholders of microcap stocks are much quicker to divest themselves of those shares at the fi rst hint of “bad news.”
 
4.
The market price of a microcap stock will never have any critical mass without substantial ownership by institutional investors, most notably microcap mutual funds.
 
5.
The three most important features of microcap stock are liquidity, liquidity, and liquidity.
 
Ralph A. Rieves, John Lefebvre

Backmatter

Weitere Informationen

Premium Partner

    Bildnachweise