Spotlight on private investors

An article by Kristin Köhler, M.A.

Private investors characteristically have a long-term interest in companies and can bring stability even at times of crisis. Carefully targeted communication based around specific needs and information demands can play a significant role in developing the investor relationship. The results of the 2012 investor study show clearly that a great deal of trust is placed in the information provided by companies, and there is strong demand for this.

What requirements do private investors have of public companies? What information do they want, and how do they want it? Where are there shortcomings in companies’ financial communications? These were questions addressed by the University of Leipzig’s Institute of Communication and Media Studies, in conjunction with the Deutsche Schutzvereinigung für Wertpapierbesitz e.V. (DSW), Schutzgemeinschaft der Kapitalanleger (SdK) – both associations protecting the interests of investors – and Deutsche EuroShop AG. More than 500 private investors were questioned about how they use information and their information needs in an online survey. The findings of the 2012 investor survey open up options for communication with this key target group.

Key-Figures of the Deutsche EuroShop-Share

WKN / ISIN 748 020 / DE 000 748 020 4
Ticker-Symbol DEQ
Share capital in € 51,631,400.00
Number of share (non-par value registered shares) 51,631,400
Indices MDAX, HDAX, DAX International Mid 100, EPRA, GPR 250, MSCI Small Cap, Dow Jones EURO STOXX TMI, EPIX 30, HASPAX
Official market Prime Standard Frankfurter Wertpapierbörse and Xetra
OTC markets Berlin-Bremen, Düsseldorf, Hamburg, Hannover, München and Stuttgart

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Private investors seek out information both offline and online. Companies need to use both channels if they are to satisfy private investors’ information requirements. The investor relations website is the main jumping-off point on the internet, and investors expect it to provide presentations, live events (e.g. teleconferencing, webcasts, online AGMs) and audio and video content. There is also a lot of interest in online annual reports. Social media are most relevant for communicating with younger people below the age of 40 and are used to obtain information on their investments and financial topics, with investor forums, online knowledge portals and blogs currently the most popular forms. It has been shown, however, that users of these applications are not focused on a single channel, but on social media more widely. There is also very strong demand for online presentations, which can be found on IR websites and on platforms such as SlideShare.

In the offline world, annual reports and printed shareholder magazines and letters are important media in communication with private investors. Online editions can make a useful addition to these printed products. They are in greater demand than live events such as the annual general meeting, financial trade fairs, investor forums and open days. Private investors also make ample use of information and advice from investor protection associations. Contrary to expectations, little use is made of tips from friends and acquaintances or even advice from banks and investment advisors in learning about investments and making decisions. Companies enjoy a lot of trust, exceeded only by journalists (print and online financial publications, and also online portals).

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Nevertheless, private investors are only moderately satisfied with the information provided by companies: IR websites enjoy the greatest recognition, and at the same time online communication is regarded as having the most potential for improving the way in which it addresses private investors. The survey respondents want a trustworthy, free, professional IR information policy, under which they receive the same information as institutional investors. In addition to hard facts such share price information and key data, private investors mainly want information on products, the company’s strategic direction and the quality of management. The study shows that private investors differ in the way they access information based on their age and affinity with the internet and social media. Investment behaviour, encompassing factors such as risk appetite, investment experience, involvement and portfolio diversification, has less of an influence on how information is obtained. The survey findings presented here give an insight into private shareholders’ investor relations needs, and so could provide valuable stimuli for target group-specific, transparent, comprehensive communication.

The author

Kristin Köhler, M.A., is a project manager at the Akademische Gesellschaft für Unternehmensführung und Kommunikation and a research associate at the University of Leipzig. She specialises in research into investor relations and financial communications.


The University of Leipzig

The University of Leipzig, no. 1 in the course rankings for communications management/PR in Germany, is one of the leading European research institutions for strategic communications. The department’s research output has fed into more than 70 books in German and English, more than 300 specialist articles and numerous studies, driving forward research and knowledge transfer.

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