The Push for Electronic Postings

On tap for today is a look at the SEC and blogs. I read Corporate Tweets and the SEC: Sometimes It’s Better to Keep Your Mouth Shut. The most interesting part was when the author, Brian Solis, discussed his views regarding electronic reports. He mentions that he posed the question earlier last year about getting rid of traditional press releases and move towards more of an electronic system of sending out information.

I find this to be a topic of extreme importance for the industry. As IR begins to move more and more online, we will see IRO’s start to push the limits of what we once thought was capable. The internet is beginning to dominate the world and more than likely everything imaginable will very shortly be online. It pushes companies to conform to technology and how the world is transforming.

Even the SEC has made the move to become more electronic. The most dinosaur of all things, the government, has made the move to go electronic. If that isn’t a significant sign of the times, then I’m not sure what is.

Adapting to Technology

I read today, As brokers hit social networks, will companies meet them there?. The article by Dominic Jones brings up interesting points regarding the use of social media by IRO’s and companies to inform investors.

From what Jones says, the IR industry seems to have some fear and/or mistrust surrounding social media. This appears to be the reasoning for the lack of use and the prohibition by many firms against using social media as a form of business communication. FINRA, the Financial Industry Regulatory Authority, has stated that it will begin looking into if regulation and these sites can someday coexist.

It’s and interesting topic that many in the industry, especially the younger IRO’s. You could potentially see firms using media such as Facebook or twitter to report quarterly’s or even a firms full yearly financials. It brings up the question of how transparent are firms and companies willing to be? Using new media like this could open up the doorway to newer, younger investors and could help companies reach out to the younger generations.

My question still remains one of transparency and how far companies are willing to go to inform their public. With the newer technologically savvy generation coming of age, it begs another question, will firms and companies adapt to the technology or will they become dinosaurs?

The XBRL Smackdown

It has been an interesting journey through many articles to find something noteworthy to discuss. I came across this article on the Cross Border Group’s website. Cross Border Group is the parent company which produces IR Magazine. Looking in this past month’s issue, I came across the article “Enforcement Smackdown”. The article discusses the industry’s reaction to the Galleon Case and the recent increase in SEC activity.

My interest was peaked by all of the remarks made by the IRO’s regarding how to combat insider trading. This blog’s intention is to look into how ethics within the industry will play out with the XBRL now on the table and I saw this as a perfect way to enter into this topic. Grant it, I will say to cover myself that my knowledge of the XBRL and its inner workings is very basic at best, and I, by no means, consider myself to be an expert on the matter. My understanding is that the idea behind the XBRL is to make reporting for companies 100% easier. The XBRL works out to be a spreadsheet with hidden tags built in, allowing companies, investors, and the government able to analyze the numbers and move them into other documents far easier. It would eliminate paper work and the countless pages of filings performed by companies. It would also allow the general public to better understand and follow a company’s financials. Overall, from the outside, it seems to be a good move.

Back to the article though. The article goes on to describe how IFOs are combating insider trading. Personally, I believe that with the introduction of the XBRL there will be fewer opportunities for insider trading to occur. Jim Allen, who is the head of capital market policy at the CFA Centre for Financial Market Integrity says that “‘The best defense is greater transparency,’ companies make themselves vulnerable to leaks ‘when they start warehousing information. If the information is in the market, you don’t have to worry about it leaking illegally.’” I think that this is exactly the answer. With an increased transparency, which will hopefully be provided by the XBRL, it will allow the general public to better understand a company’s financials and allow for more informed decisions.

The reason for insider trading is like so many other things in life, money. The world is constantly looking for an edge on the competition, and insider trading, though illegal and morally unfit, is the means to that end. If the XBRL does what it is supposed to and provides more transparency, then the need will not be so much for those who posses the coveted secret information, but for those who are highly skilled at interpreting and predicting based off of filings. The possibility for any Joe Schmo to pick up a filing report and be able to analyze it, now increases because all the information will be in one place and be easily inspected to find the trends.

Perhaps I am too much of an outsider to have a full grasp on the situation, but unfortunately I am optimistic and feel that sometimes the government does things that will truly benefit the population. At the same time, I am not naive and do understand the way the world works and as NIRI’s chairman Brad Wilks puts, “There are bad eggs who want to circumvent the rules and cheat, they’re going to find a way to do it, whatever the rules are. That’s why we have enforcement agencies like the SEC.”