Should media members be allowed to ask questions during earnings calls?

In an increasingly social media-focused world in which companies are leveraging these platforms to interact with audiences during earnings calls, limiting these events only to investors is an outdated practice.

Yes
Mitzi Emrich
Chief social strategist, MWW
Has worked on numerous social and digital efforts for clients at Edelman and FTI Consulting, as well as Sierra Club

Earnings calls are an opportunity to share key financial information, connect influencers to corporate leaders, and – most importantly – shape a compelling narrative about a company’s position in the market.

While these conversations can move markets and make or break corporate reputations, it’s still somewhat rare for companies to provide media the chance to ask questions on an earnings call.

Queries tend to be held for the conclusion of an executive’s presentation and reserved solely for analysts.

It’s understandable that corporate communicators and IR pros want to shield executives from tough questions from media. However, the sense of scripted discussion found during earnings calls is becoming increasingly at odds with the way institutional investors and analysts find information and assess the value and financial performance of companies.

Instead, it may be worth considering if earnings calls are still effective for communicating with analysts and media. Or should companies conduct these calls alongside other activities that allow them to connect with shareholders and other important audiences in new ways?

Expectations for corporate transparency, real-time engagement, and social conversation are no longer limited to consumer audiences.

The investment community is now just as likely to look to online channels for breaking financial news or updates on company performance as they are to participate in an earnings call.

As a result, journalists, bloggers, and other market commentators now play a growing role in validating corporate performance and amplifying key messages typically shared during earnings events.

Innovators such as eBay, Netflix, and Zillow have gone beyond the question of whether or not media can ask questions during earnings calls. From live Facebook broadcasts of presentations to Twitter chats held in real time during earnings calls, there is a growing list of social media tools that companies can leverage to connect, not just with journalists but also with analysts and investors they deeply care about.


No
Jeffrey Zelkowitz
Senior director and global financial practice leader, APCO Worldwide
Two decades of experience in financial markets and media 

If someone asked, "Can companies give exclusives to financial analysts?" the reaction should be a horrified "No. That would be selective disclosure," an obvious violation of the SEC’s Regulation Fair Disclosure rule. But media exclusives are accepted practice, and the right of journalists to use such information is protected by the First Amendment.

Earnings calls and webcasts are considered an appropriate Fair Disclosure forum open to all audiences including investors and analysts, individuals, and the press. These calls act as a key mechanism for maintaining a level playing field and avoiding selective disclosures.

The principal function of earnings calls, however, is to enable financial-market participants to digest news about a company’s performance after the information has been made public.

Aside from what can be gleaned from financial statements, questions posed to executives on earnings calls help to clarify data, test assumptions, and shed light on operating and market trends in a frenzy of analysis before the opening bell.

The purpose of the call is to help investors and analysts understand what’s going on and make the best decisions – ones that affect stock price and shareholder value.

The insights provided by executives on conference calls inform research opinions and investor confidence about the company. This two-way dialogue between companies and financial followers and the transparency provided by these calls ultimately benefits shareholders and public markets.

Reporters also have a job to do. They listen to earnings calls in real time, in addition to developing their own sources with executives and financial analysts. Companies can and do engage the media around earnings with CNBC interviews, calls with reporters, going on background, or with embargoed exclusives. But the interests of journalists and their desired end product – a story – diverges from market participants’ needs for digesting financial information. 

Turning earnings calls into press conferences could detract from their primary function as a timely, transparent IR forum.


PRWeek's View
In an increasingly social media-focused world in which companies are leveraging these platforms to interact with audiences during earnings calls, limiting these events only to investors is an outdated practice.

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