Financial communication tells your company's story

Above all else, Investor Relations (IRs) are responsible for showing the best image of their company to various stakeholders. It for example involves anticipating the impact of all reporting decisions on long-term visibility and profitability.

Of course, as listed companies are targeted by an increasing amount of legal requirements and compliance regulations, IRs must ensure that their company's financial information is reliable, transparent and conforms to the applicable accounting and regulatory standards. They must also meet regular reporting deadlines in time, in order to avoid sanctions.

But far beyond compliance, financial communication is, a strategic area. Good financial communication goes a long way to secure sustainable investor trust. This involves making strategic choices among the tons of financial information generated each year by their company: knowing what to highlight and when to be impactful, consistent and well-valued.

All in all, financial communications are not just about the numbers, but about telling the company's story in a clear and understandable manner.

But why and how improve your equity story?

Your financial data also tells your company's equity story. In order to reach a maximum of investors, this information must be easily accessible and understandable.

Indeed, investors make informed decisions based on the data they can exploit. When they evaluate the risks and yield potential associated with an investment, they compare results and performance prospects of companies across entire sectors.

Issuers therefore need to publish comparable data to help financial analysts to better understand their financial performance compared with the rest of the sector. As a result, they become more visible to investors than a company that publishes its data in non-comparable format.

The types of datas you disclose thus determine how visible you are. But how can you even know if your data is comparable to your competitors'?

Data comparability: know where you stand

As explained above, comparable datasets are needed to carry out industry-wide screenings and thus favour investment on any market. This is why financial regulations, such as United States Accounting Standards (GAAP) or International Financial Reporting Standards (IFRS), set out strict accounting requirements for companies' financial disclosures.

These requirements are, of course, reflected in issuers' publications in Europe. But are they enough to foster true data comparability? Using our proprietary database, we conducted an experiment by comparing each component of the operating income of 393 French companies and 2.181 European companies (all of which published their 2022 statements in the ESEF format).

In order to account for each industry's specificities, we carried out a comparative analysis by sector (a key feature of the Corporatings database), which allowed us to give each industry a "comparability score" (contact us to learn more about this score).

The results highlight how useful the ESEF format can be to assess the comparability of a company's statements with the rest of its sector. This can help issuers improve the comparability of their own financial statements when they prepare their annual reports – and thus increase their visibility among investors.

For instance,some sectors show a high comparability among French and European firms, like pharmaceuticals or industrial services. Others, however, reveal a striking discrepancy between French firms and their European peers, such as real estate development or diversified financial services.

What about your firm? Which issuers do you compare yourself to?

But once you notice such a lack of comparability, how can you effectively align your financial statements with the rest of your industry? The answer is plain: for your data to be comparable with your competitors', you need to know what your competitors publish.

How Big Data is changing the game

For issuers to efficiently compare their financial data with their competitors, this data must be accessible in a centralised platform. And despite all the talk about the potential of Open Data for the financial sector, there is currently no public database containing sufficiently granular data for detailed comparisons.

Fortunately, Corporatings built the solution to help all professionals access public data quickly and reliably: LENS, the financial database you need to improve your equity story.

Our SaaS solution was designed to meet your needs:

• ‍Download and manipulate the data youneed, in the format you choose.
• Carry out studies and benchmarks on your entire sector. ‍
• Compare your competitors' data and choose the most relevant data to include in your firm's publications.

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‍Request a Lens demo and take advantage of your competitors' data to improve your equity story!