Managing financial communication : towards a conceptual model

Abstract

The research problem this study seeks to address is that confusion exists regarding the nature, management and organisation of financial communication. Six objectives guide the research efforts. Theoretical perspectives surrounding investor relations, public relations and accounting are used to describe the current approach to financial communication (Objective 1). Two main shortcomings of the current approach are identified (Objective 2): - a lack of integration in the management and organisation of financial communication; and - a narrow focus on communication with the financial community alone. This leads to Objective 3 (theoretical justification for an inclusive approach to financial communication). Perspectives from the corporate governance, corporate social responsibility, stakeholder and public relations as relationship management literature are used to prove that organisations need to engage in financial communication with all relevant stakeholders, not only "financial" stakeholders. In order to achieve Objective 4, the theoretical perspectives mentioned above are used to develop a conceptual model for an inclusive and integrated approach to financial communication. The model provides a point of departure for future research. The empirical component of the study supplements the theoretical component. Quantitative, exploratory survey research is done to establish whether a number of South African companies listed on the Johannesburg Stock Exchange follow an inclusive and integrated approach to financial communication (Objective 5). The main conclusions are: - that there are indications of an inclusive approach to financial communication, although respondents varied in their opinions; and - that there are indications of an integrated approach to financial communication, although the majority of respondents indicated that a single department takes responsibility for financial communication. Similarities and differences between the results of this study and those of studies conducted previously in the USA, United Kingdom and Europe, are also identified (Objective 6). Finally, the limitations of both the theoretical and empirical components are used to formulate recommendations for future research. It is recommended that future efforts concentrate on the contributions that disciplines such as marketing, law, economics and financial management can make to financial communication. The research strategy (qualitative or quantitative) also needs to be carefully considered.