Survey shows honesty is vital in City

Investor and analysts rank honesty the most important factor in maintaining good links with the City - over and above company performance - according to a report by the Investor Relations Society and MORI.

The study, which surveyed 96 institutional investors and 68 sell-side analysts, reveals they judge a company's relationship with the financial community first by openness and honesty, followed closely by full disclosure of strategy, communication and then regular meetings.

Thirty-four per cent of analysts and 46 per cent of investors judge senior management on their honesty and integrity, showing a rise of 11 and three per cent on last year.

MORI IR practice head Roger Stubbs said: 'The message the report sends out to IROs is that they have to tell the story as it is and not put the spin on it that they'd like to.'

The report, entitled Effective Investor Relations 2003, suggests while the majority of both investors and analysts believe IR has improved, there is a gap in opinion between the two groups.

Nearly 70 per cent of analysts say the quality of corporate IR has improved over the last two years, compared to just 40 per cent of investors.

Society chairman Richard Bowler said there has been a tendency to concentrate on sell-side analysts over buy-side analysts, which influence investors, partly explaining the difference in opinion.

The survey also revealed the Financial Services Authority's newly introduced rules and regulations are having an effect on IR, with almost half of investors and analysts saying that information from listed companies has increased.

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