Investor Relations

IMPLEMENTING BEST PRACTICES IN INVESTOR RELATIONS 113Are the causes internal to the company or external?What is the financial impact of the problem?What measures and action plan has the company implemented to remedythe situation?The company may not readily offer revised targets, only if it is necessaryto do so: These revised targets may be delivered to the market at a laterdate, for instance, upon the initially scheduled reporting date, once thecompany has gathered all the information it needs to revise them. This,however, is likely to create overhang in the stock until new objectives aremade available.In the vast majority of cases, warnings and preannouncements refer to anegative performance: Results are not going to be what was expected. Butpositive preannouncements do happen, though rarely (in other words, thecompany may decide to announce that its performance is going to exceedits initial projection, ahead of the initially scheduled reporting date): Theyare also usually called earnings surprises. That says it all!3.5.4 Shareholder Value CreationThe concept of shareholder value creation has become one of the most widelyendorsed messages in financial communications and Investor Relations: Itis virtually every listed company’s official goal to create value for its shareholders.Unfortunately, it has become far too generic to be as compellingas it may have been in its early days. The reason lies in the absence of substanceattached to it.Shareholder value creation as a strategic direction and as a messagebecomes relevant if and when it describes the levers used by managementto achieve this much-desired ambition. Financial communications willthen focus on communicating their respective characteristics, roles, andtargets. Aiming at presenting the company’s strategy as geared to creatingshareholder value, these messages can be articulated around the followinglevers:Financial levers:Increase earnings per share;Improve total shareholder return;Generate investor trust;