Communication of global companies with the capital market

Über dieses Buch

Art: Dissertation / Doktorarbeit
Autor: Michael Strohmer
Abgabedatum: November 1998
Umfang: 102 Seiten
Dateigröße: 4,3 MB
Institution / Hochschule: Johannes Kepler Universität Linz Österreich
ISBN (eBook): 978-3-8324-5161-5
ISBN (Paperback) :
978-3-8324-5161-5 P
ISBN (CD) :978-3-8324-5161-5 CD
Sprache: Englisch
Prämierung:
Arbeit zitieren: Strohmer, Michael November 1998: Communication of global companies with the capital market, Hamburg: Diplomica Verlag
Schlagworte: SEC, Wertpapieraufsicht, Kommunikation, Kapitalmarkt, globales Unternehmen

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Dissertation / Doktorarbeit von Michael Strohmer

Abstract:

Communication of global companies with the capital market is a very actual topic and becomes more and more important nowadays. A good communication is necessary for all companies listed an the stock exchange.

I wrote about this topic because firstly communication in general is interesting for me and secondly since a long time I was fascinated by the capital market and by the facts that a company has from one day to the other more or less value and that people make a lot of money by following and analysing information of global companies. So I wanted to treat communication in general, then going more into detail in investor relations, which is a special kind of communication (financial community). My goal for this chapter was to show the ways of communication of global companies with the capital market in the form of reports, key figures etc.

Activities have to be done by law and that is why we can find in regulations for these activities everyday life. Also communication has to be regulated. As regulating authorities the BWA (Bundeswertpapierausicht), the SEC (Securities and Exchange Commission) and the NASD (National Association of Securities Dealers) are mentioned. They regulate and supervise communication and information. The most dangerous information for the capital market – and the efficiency of the capital market – is insider information, which cannot be avoided. Insider information and the forbidden part of it, insider trading, are also treated as a kind of „forbidden communication“.

The last part is a study about a global company, VA TECH. VA TECH is a global company based in Austria and has got a „leadership in communication“ in Austria. Most of the information in part one can be found presented an the example of VA TECH in part two. I also listed the different communication skills and communication techniques of VA TECH. The last chapter is about the pluses and minuses of VA TECH's communication policy and some recommendations for the future.

As I said before, communication of global companies with the capital market is a very actual and important one. My studies at the university should be a kind-of preparation for the job: I want to work in a department which has a lot to do with Investor relations and analysing the capital market, whether it is in a certain company, in a job as consultant or in a job as investment banker. This interests me and that is why I selected a topic where I can already treat the important facts about communication with the capital market.

During my New York stay, where I worked for two companies belonging to VA TECH - American Elin Corp. and Voest-Alpine International Corporation I spoke several times about communication and investor relations with Mr. Morawa and Dr. Nussbaumer. Dr. Schwaiger gave me the possibility to meet Mr. Gyula Schuch of CA-IB New York. He explained the capital market to me and how information goes from the company via analysts and investment banks to the investors. It was a good experience - which is not part of my work - to see an investment bank and analysts room. In New York I also bought many books and I spent several evenings in the Public Library to find information and books for my work. Having the concept I began to write the first pages in July and used especially August and September to complete the work. Dr. Schwaiger and I had contact and spoke about the procedure and the current situation of my work. During my writing period I also spent several hours or better days in the internet to get more information and to look at the web pages to know what other companies do for their investor relations.

For the last part - VA TECH - Dipl.-Ing. Hagenauer gave me an interview with all the detailed information I needed for listing what VA TECH does for „their“ investors. Afterwards I compared the List with the theory part of my work. - As it was my target to show theoretically what a global company should do and has to do for good communication with the capital market, I hope that the reader has got all the expected information.

Table of Contents:

0	INTRODUCTION	4
I.	COMMUNICATION IN GENERAL	6
I.A	THEORY OF COMMUNICATION	6
I.A.I	TECHNICAL INTERFERENCE	7
I.A.2	SEMANTIC INTERFERENCE	8
I.A.3	ENVIRONMENTAL INTERFERENCE	8
I.B	DIFFERENT KINDS OF COMMUNICATION	9
I.C	CORPORATE COMMUNICATION	10
II.	PUBLIC RELATIONS	12
II.A	RACE AND ROSIE	12
II.B	THE TARGET GROUPS OF PUBLIC RELATIONS	13
III.	INVESTOR RELATIONS	15
III.A	THE INVESTOR	17
III.A.1	ECONOMIC AND POLITICAL SITUATION	17
III.A.2	INVESTMENT BANKS, ANALYSIS	18
III.A.3	PRICE OF SHARE AND PRICE OF OTHER SHARES	20
III.A.4	OTHER INVESTORS	21
III.A.5	PUBLIC RELATiONS	21
III.A.6	PRESS AND MASS MEDIA	22
III.B	HOW CAN A COMPANY COMMUNICATE WITH ITS INVESTORS?	23
III.B.1	LEGAL REQUIREMENTS	24
III.B.1.A	NORMAL PUBLICTTY	24
IlI.B.1.B	AD-HOC PUBLICITY	26
III.B.1.C	PUBLICITY ABOUT CHANGES	27
III.B.1.D	GENERAL ASSEMBLY	27
III.B.2	OPTIONAL OR VOLUNTARY COMMUNICATION	28
III.C	KEY FIGURES FOR INVESTOR COMMUNICATION	31
III.C.1	KEY FIGURES - „AS USUAL”	31
III.C.2	WACC - WEIGHTED AVERAGE COST OF CAPITAL	33
III.C.3	CASH VALUE	34
III.C.4	ROCE - RETURN ON CAPITAL EMPLOYED	34
III.C.5	EVA - ECONOMIC VALUE ADDED	35
III.C.6	WHAT IS IN A RESEARCH OF AN INVESTMENT BANK?	36
IIID	PRINCIPLES OF COMMUNICATION	37
III.D.1	IMPORTANCE	37
III.D.2	CONTINUITY, CONSTANCY, COMPARABILITY	38
III.D.3	ADEQUATE ADDRESSEE	38
III.D.4	ACTUALITY	38
III.D.5	EFFICIENCY	39
III.D.6	REPUTATION	39
III.E.	FAQ (FREQUENTLY ASKED QUESTIONS)	39
III.E.1	QUESTIONS ABOUT THE CURRENT SITUATION	40
III.E.2	QUESTIONS ABOUT THE MARKET	40
III.E.2.A	QUESTIONS CONCERNING TURNOVER	40
III.E.2.B	QUESTIONS CONCERNING THE MARKET	41
III.E.2.C	QUESTIONS CONCERNING SALES AND DISTRIBUTION	41
III.E.2.D	QUESTION CONCERNING COMPETITORS	41
III.E.2.E	GROWTH RATE	42
III.E.3	QUESTIONS CONCERNING THE PRODUCTS	42
III.E.3.A	PATENTS	42
III.E.3.B	PRODUCTS AND SERVICES	42
III.E.3.C	RAW MATERIALS	42
III.E.3.D	RESEARCH AND DEVELOPMENT	43
III.E.4	FINANCIALS	43
III.E.4.A	FINANCE	43
III.E.4.B	PROFIT AND LOSS ACCOUNT	43
III.E.4.C	CASH FLOW	44
III.E.4.D	BALANCE SHEET	44
III.E.5	QUESTIONS CONCERNING MANAGEMENT AND EMPLOYEES	44
III.E.5.A	MANAGEMENT	44
III.E.5.B	EMPLOYEES AND UNIONS	44
III.F	COMMUMCATION MEDIA IN COMPARISON	45
IV.	REGULATED COMMUNICATION	47
IV.A	TUE AUSTRIAN „BUNDESWERTPAPIERAUFSICHTBEHÖRDE (BWA)	48
IV.A.1	TASKS OF THE BWA	48
IV.A.2	FAIR AND ORDERLY TRADING	49
IV.A.3	IS IT NECESSARY TO HAVE A BWA IN AUSTRIA?	49
IV.B	THE SECURITIES AND EXCHANGE COMMISSION (SEC)	50
IV.B.1	MEMBERS AND STAFF OF THE SEC	51
IV.B.2	THE SECURITIES ACT OF 1933	52
IV.B.3	THE SECURITIES EXCHANGE ACT OF 1934	52
IV.C	NATIONAL ASSOCIATION OF SECURITIES DEALERS (NASD)	52
IV.D	INSIDER, INSIDER INFORMATION, INSIDER TRADING	55
IV.D.1	WHO IS AN INSIDER AND WHAT IS INSIDER INFORMATION?	55
IV.D.2	THE DIFFERENT KINDS OF INSIDERS	56
IV.D.2.A	INTERNAL INSIDERS	56
IV.D.2.B	EXTERNALINSIDERS	57
IV.D.3	PUBLICITY AND INSIDER INFORMATION	57
IV.D.4	WHY IS INSIDER TRADING FORBIDDEN?	58
IV.D.4.A	INDIVIDUAL PROTECTION	58
IV.D.4.B	PROTECTION OF THE PUBLIC	59
V.	STOCK EXCHANGE CULTURE AND EFFICIENCY OF THE CAPITAL MARKET	60
V.A	STOCK EXCHANGE CULTURE	60
V.A.1	NEW YORK STOCK EXCHANGE	60
V.A.2	VIENNA STOCK EXCHANGE	60
V.A.3	DIFFERENCES IN THE STOCK EXCHANGE CULTURE	61
V.B	EFFICIENCY OF THE CAPITAL	62
V.B.1	THE PRINCIPLE OF CAPITAL MARKET EFFICIENCY	62
V.B.2	BASIS FOR CAPITAL MARKET EFFICIENCY	62
V.B.3	THIS IS AN EFFICIENT CAPITAL MARKET	63
Vl.	ASSESSMENT OF COMMUNICATION WITH THE CAPITAL MARKET	65
VII.	HAS COMMUMCATION AN INFLUENCE ON THE PRICE?	67
	CASE STUDY: VA TECH
0.	INTRODUCTION	70
I.	VA TECH	71
II.	ANALYSING BRANCHES	83
III.	HOW DOES VA TECH COMMUNICATE WITH ITS INVESTORS?	85
III.A	INVESTOR RELATIONS ACTIVITIES FOR INSTITUTIONAL INVESTORS	85
III.B	INVESTOR RELATIONS ACTIVITIES FOR PRIVATE INVESTORS	86
III.C	INVESTOR RELATIONS MEDIA	86
IV.	COMMUNICATION POLICY OF VA TECH	87
V.	EVALUATION OF VA TECH'S COMMUNICATION WITH THE CAPITAL MARKET	89
V.	RECOMMENDATIONS FOR THE FUTURE	90
	FIGURES	92
	BIBLIOGRAPHY	93