Introducing the Market Impact Report – Revealing the Effect of News Releases on Stock Activity

June 15, 2015

By Vilan Trub, Business Wire

Earlier today, Business Wire and News Quantified launched the Market Impact Report.  This groundbreaking new measurement tool allows communication professionals to track the impact their news releases have on publically traded companies’ stocks.

Although there are a lot of options for measuring communications efforts, there is a gap when it comes to attributing financial ROI to company issued news. Business Wire identified this gap and in News Quantified saw an opportunity. News Quantified, in partnership with Business Wire, developed a measurement system that will tie news release data with market trading behavior. Now, PR and IR pros will be able to track exactly how the market reacted to the issuer’s stock immediately following the release of company news. They will also be able to compare this trading behavior to that of other company stocks.

What’s the big deal about keeping track of changes to market behavior following the issuance of a news release? With the Market Impact Report you can achieve a deeper understanding of how and why your company stock moves when you issue a news release. You have a deeper view of what kind of investors your news is attracting and how your news is influencing their trading. The report includes 27 key variables ranging from volume and variability to ticks and block trading.

By understanding who your news is reaching, you can tailor your communication in the direction that best benefits the value of your company’s market presence.

Oliver Schmalholz, co-founder and CEO of News Quantified, has spent the last 15 years analyzing market behavior. It was during his time running a private trading firm that he recognized the benefits of an out-of-the-box product that could analyze news impact on stock trading behavior. “News and market data have historically been kept separate – our alliance with Business Wire will help to tear down that wall,” says Schmalholz.  “We are thrilled to partner with a company that has the reputation and expertise of Business Wire.

Business Wire is excited about the partnership and looks forward to the possibilities that lie in providing clients with the first ever financial impact tool. “Business Wire’s collaboration with News Quantified provides listed companies with a better understanding — and appreciation — of the relationship between news and share price.  To see how news is directly influencing market behavior is revolutionary,” said Gregg Castano, Business Wire President. “The Market Impact Report consolidates information from disparate sources into a convenient, user-friendly report that distills complex data into key findings. It is another example of Business Wire’s differentiating value proposition.”

Click here to learn more about the Market Impact Report:  http://bit.ly/1QrNSV8 or email us today to schedule a time to discuss this in greater detail.

Are you attending NIRI 2015 this week?  If so, Business Wire is offering sample reports for investor relations professionals that stop by our booth. The Market Impact Report is the first product in the industry that provides communications professionals with comprehensive stock impact data.

Click here to share this exciting news on Twitter: http://ctt.ec/1lfCK

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Why the Deck is Stacked Against Retail Investors

February 3, 2011
by Neil Hershberg, Senior Vice President, Global Media
Neil Hershberg

Neil Hershberg, SVP - Global Media

The classic Cole Porter musical, “Anything Goes,” is returning to Broadway this spring.

Retail investors won’t have to wait that long. In practice, “Anything Goes” has become the unofficial mantra of Wall Street, the Digital Age’s equivalent of ‘The Wild West” when it comes to disclosure.

Unfortunately for individual investors, who invariably get the short end of the stick, the folks in a position to end today’s information free-for-all have yet to take action.

At the risk of sounding like the Cassandra of capitalism, here’s why retail investors are swimming upstream:

1. Reg FD’s “level playing field” has become the regulatory equivalent of an ecological disaster area; it is eroding faster than many storm-swept East Coast beaches.

Mega-cap companies with huge investor followings have, for reasons best known to themselves, opted for micro-disclosure, dispensing with broadly disseminated news releases in favor of standalone web postings or similar truncated practices.

Rather than providing simultaneous, real-time information access to all interested investors, these best-practice contrarians have essentially decided to ladle access on a sequential basis to anxious  investors clamoring for corporate updates.

Over the past few decades, we’ve regressed from “trickle down economics” to “trickle down disclosure.”  Unfortunately, retail investors are the ones getting hosed.

Ironically, technology trend-setters are among the most flagrant abusers of acknowledged best-practice disclosure practices. These industry leaders should know better than anyone the inherent technical limitations of the Internet, and why the web’s architecture makes it impossible to meet the complex challenge of simultaneity.

2. Retail investors also are unknowingly getting eaten alive by spiders; these automated creepy crawlers have become a hidden epidemic.

While Bloomberg recently generated headlines when it published Disney and NetApps earnings results in advance of their official release, the real concern for retail investors should be the stealth spidering tactics of traders deliberately seeking to stay under the radar.

The spiders unleashed by Bloomberg and Selerity likely have plenty of company. In all probability, armies of incognito spiders are clandestinely retrieving troves of actionable, non-public data for their trading masters.

Even if these spiders fail to uncover non-public material information, their very use provides an unfair edge if publicly traded companies do not broadly disseminate their news via a service such as Business Wire.

The reason is that spiders are faster than the RSS readers that retail investors rely on for news alerts when disclosure is limited to a standalone web posting. Whereas Business Wire distributes market-moving news simultaneously and in real-time to financial information systems, portals, and media platforms worldwide, standalone web postings create a feeding frenzy for these rapacious spiders.

Retail investors have a legitimate reason to be suffering from arachnophobia; they are at a distinct disadvantage to market players that control these powerful technology termites.

3. There is a well-known saying that in life, “timing is everything.” That is certainly the case on Wall Street, where latency and milliseconds rule the day.

Winning on Wall Street is largely contingent on the ability to access and act on information faster than anyone else.

Institutional investors clearly have the necessary resources and technology at their disposal to triumph in today’s trading environment.

Notice-and-access and web disclosure disproportionately favor the professional investor, who can read – and react (perhaps even robotically) – far more quickly than the average retail investor.

The trading activity following Netflix’s recent web posting of its earnings (January 26 at 4:05 pm/ET) illustrates the high stakes involved.

More than one-third of Netflix’s total share volume for the day, or just over three million shares, traded after Netflix posted its earnings.

In after hours trading, Netflix’s shares were up $19.16 (10.47 percent).

Although individual investors now have the opportunity to trade in the after-hours market, they are being steamrolled by institutional traders, who clearly have the capability to react with more immediacy.

Retail investors are forced to play a bad hand. A recent blog post by Jack Campbell at 24/7 Wall Street, “Ten Ways Wall Street Crushes Retail Investors,” elaborates on many of these same themes: http://247wallst.com/2011/01/26/ten-ways-wall-street-crushes-retail-investors/

The common denominator linking all these examples is access to material information.

Regulation Fair Disclosure, in its original iteration, is clear on this point: all investors should have equal access to information at the same time.

The answer to the disclosure dilemma is obvious: the integrity of Regulation Fair Disclosure must be restored if retail investors are to be equal market participants.

Simultaneous, real-time access to disclosure news is the only solution that will put an end to the emerging two-tier access system that is slowly taking root.

It’s time for retail investors to get the fair shake they deserve.


Web Spiders: Enough to Make Investors’ Skin Crawl

November 23, 2010

by Neil Hershberg, Senior Vice President, Global Media

Neil Hershberg

Neil Hershberg, SVP - Global Media

Forget about bedbugs. The real threat to anyone involved in the financial markets these days is spiders – and I’m not talking about the eight-legged variety.

Spiders — sophisticated web-crawling software – are seemingly rampant on Wall Street, wreaking havoc in the financial markets, and yielding big profits for select investors in the know.

There were several incidents recently in which earnings results were leaked to the market in advance of their scheduled release. The predictable result: widespread investor confusion.

Shares of NetApp Inc., one of the affected companies, sank sharply in the subsequent market volatility, leading to a nearly one-hour trading halt.

The use of these advanced search bots is certainly nothing new; what has become apparent is their disruptive impact on fair and orderly capital markets. More ominously, the growing use of these bots threaten to make a mockery of the principle of fair disclosure.

The problem is not uncommon. Ironically, Jeff Morgan, president and CEO of the National Investor Relations Institute, issued a warning to NIRI members about a week ago:

“I recently spoke with a member who told me about a situation where a news organization ran a story on their earnings 45 minutes before the earnings announcement was scheduled for release. The company released their earnings immediately and began an investigation. The company found that the news entity breached an unpublished area of the company’s online newsroom and accessed the confidential draft earnings release by using sophisticated, proprietary web crawlers. The company routinely used this private website area to post and format draft earnings releases prior to publication. Their plan was to do as they had done for many prior quarters and open access to the release once it became public. Unfortunately, the unpublished release was discovered overnight by the media outlet’s proprietary web crawlers. For IR professionals the lesson learned is to be sure your documents are secure on the web wherever they reside. And a word to the wise – the member noted that the news organization pointed out that this type of discovery has happened before.”  [IR Weekly, November 9, 2010 issue]

The major market-moving news services have long relied on spidering technology to ferret out news that hasn’t been disclosed via conventional channels. What has largely remained under the radar is how the wizards of Wall Street are similarly taking advantage of state-of-the-art software to identify hidden trading opportunities. It is a safe bet to assume that the financial news wires aren’t the only ones routinely trolling the Internet in search of actionable information.

While spiders are a major concern, issuers must also deal with another silent but potent threat: Their own lack of imagination in naming their important  news and data files. Due to habit or inertia, many issuers sequentially name their financial files, or use other intuitive names for identification purposes. This scenario potentially allows a skillful web spy to decipher the URL of material information waiting to be released to the market place.

As if all this depressing disclosure news isn’t disturbing enough, there was also the recent revelation that Google might be stacking the deck in favor of  its own properties. According to Harvard Business School assistant professor Ben Edelman, Google’s search results aren’t as objective and unbiased as the search giant has led us to believe. Edelman’s study concludes that “Google has made inaccurate representations to the public including to users, publishers, advertisers, investors and regulators.”  Based on his findings, Google may not be the unbiased arbiter of information exchange that it has successfully portrayed itself to be.

Clearly, “self-publishing” is more complex – and has more associated risks with dire market consequences – than may seem obvious. The costs and complexities of the required security upgrades are likely to far outweigh any perceived cost-savings. And the potential loss in market valuation and credibility in the event things go awry is by far the largest financial liability of all.

So what is the simplest, most effective way to navigate this obstacle course?  More importantly, what is the best way to maximize the reach of your message so that the market is fully informed? Hopefully, it should be obvious that posting the news on your web site won’t get the job done, and also is fraught with hidden dangers and unintended consequences.

A broadly-disseminated news release issued via Business Wire remains the surest way to ensure full and fair disclosure. All market participants have simultaneous, real-time access to price-sensitive information.

We have invested tens of millions of dollars in building the industry’s most advanced and secure systems for processing and distributing news. We are vigilant about security to the point of paranoia: Our databases, workflow systems, and public facing web sites are secured from spiders or anyone trying to gain unauthorized access to clients’ pre-released financial information.

And it isn’t just us saying it – Business Wire is audited annually in multiple jurisdictions where we are sanctioned to operate as a regulatory disclosure service. Additionally, as a proud member of Berkshire Hathaway, we answer to a higher authority and undergo a separate corporate security audit. These rigorous reviews, conducted by the world’s leading independent auditing/management consulting firms, certify that our network systems and operational procedures meet the most demanding global standards.

In a risk/reward analysis, web disclosure simply doesn’t make sense for issuers, and is a major disservice to investors.


Disclosure: The Dawning of the Age of Precarious – Let the Sunshine Back In

November 18, 2010

by Cathy Baron Tamraz, Chairman and Chief Executive Officer, Business Wire

Once upon a time, in the Year 2000, a wonderful law was passed that protected the interests of all investors in our great land. You may have heard of it; it was called Regulation Fair Disclosure.  Thanks to the great mind of Arthur Levitt, the “whisper” and good ol’ boy network that had gone on for far too long on Wall Street by those in the know, was finally curtailed.  Good triumphed over evil on October 23, 2000 – and all of our citizens were protected.

Reg FD served to shine a bright light on material information, so that now everyone had equal access to all news that could impact a stock price.  It was a great day for the retail investor, and all was well in our land. The new words of the day were “full and fair for all.”   Transparency and simultaneity were now the gold standards and endorsed and enforced by our nation’s regulators.

To assist in ensuring that all companies now played by these new rules, “neutral” services like Business Wire were touted and recommended as best practice and “valuable” newswires for the purpose of making news ubiquitous and available to all. This made sense because it confirmed the vital role they have played for 50 years in helping to keep “law and order” on the Street. Further, our nation’s regulators relied on Business Wire’s audit trail to help keep our markets honest. Business Wire’s proprietary news delivery platform ensured simultaneous, real-time access to all investors.

Regulation FD flourished, and all was well.

But alas, in August 2008, a seemingly insignificant event led to some unintended consequences – a dark cloud now hovered over full and fair disclosure.

 

Image by Flickr user r8r

 

In an attempt to embrace new technology and encourage more disclosures, not fewer, an interpretation (not a rule change) was added to Reg FD that encouraged the use of company websites as an enhancement.  This certainly made sense because it provided an added venue for material news, thus widening access. Our regulators wanted to appear current and relevant – and that made sense.  All seemed fine in our great land . . . the more, the merrier. Or so it seemed.

But then something strange happened . . . self-anointed experts promoting their own commercial agenda decided that restricting the information flow by limiting it to a company website ONLY, was now good enough.

Let the people figure out when and where the information is available. Let the reporters, analysts and investors troll through thousands of websites to find and report on the information. Let the algo traders, who have the most sophisticated systems, get a jump on the news and perhaps beat out everyone else. In effect, let the retail investor eat cake.

Even worse, questions around system crashes, redundancy, security and simultaneity were not even addressed, because those who were now playing in this arena had no idea of its complexity – and had not even thought it through.  What about those vital security audit trails?  What about protection from insider trading allegations with standalone web disclosure?  What about server crashes? What about redundancy and simultaneity?

Alas, darkness was falling . . . and the proof was in the proverbial pudding. In the few instances where this “standalone methodology” was followed, the truth revealed itself. Confusion now reigned, as investors scrambled to get the news.

THE MORAL OF THE STORY:

Reg FD’s level playing field is in danger of going “POOF”, turning a prince back into a frog.  However, this parable can still have a happy ending.  We can’t let the Holy Grail of full and fair disclosure slip away. The SEC did not intend it to be that way – just read the SEC’s CIFiR report, citizens.

This much we know: Reg FD was meant to protect all investors – and retail investors, in particular, dread a return to the dark days (and Wall Street whisper) of disclosure. Therefore, we ask our nation’s protectors to slay this dragon, to clarify both the spirit and intent of the Interpretive Guidance, and to let the sun continue to shine on our financial markets.


When is Disclosure not Disclosure?

November 10, 2010

by Gregg A. Castano, President, Business Wire

Gregg Castano, President, Business Wire

 

Forget about level playing fields, Regulation FD, interpretive guidance and recognized disclosure channels. What about good, old-fashioned EFFECTIVENESS?

Have we entered a bizarro world in which simultaneously making material information available to millions of investors via every conceivable communications method known to modern man has somehow become LESS effective than posting that same information to one, lonely site on the Internet and hoping that whomever wants access to it will come a lookin’?

If that’s the case, then the sky isn’t really blue, death and taxes aren’t sure things and 15 minutes can’t save you 15% on your car insurance.

Why would it be considered MORE effective, or even sane for that matter, to force every investor, private or professional, to have to frantically hop from web site to web site to web site ad infinitum on any given earnings reporting day to gain access to news that is already fully aggregated and uniformly available in real-time to them at no charge in any number ways, including the mobile phones in their pockets?

Is this some kind of plot against investors by corporate mad scientists, or maybe a sick prank being played upon the investment public by the angry and vengeful ghost of Kenneth Lay? Did Foolish suddenly become the New Wise?

Why wouldn’t the SEC, an organization that should be leaping at every opportunity to undo the damage to its credibility caused under previous Chairman Rufus T. Firefly . . . I mean Christopher Cox, step in and put an end to this electronic game of “Where’s Waldo?”.

Questions, questions. The answers to which seem simple enough that my seven year old twins can easily grasp them. But I guess the obvious has turned into the obscure and the direct into the circuitous. The only thing left for me to do is go home and tell my twins that Daddy was wrong; two plus two actually equals five.


Business Wire’s Michael Becker Takes On Web Disclosure

August 2, 2010

Recently, Bulldog Reporter’s IR Alert published a piece authored by Thomson Reuters’ Steve Roycroft on web-based disclosure and its future.  Michael Becker, SVP, Financial Product Strategy for Business Wire, responds today in an article called It’s Time for the Truth: Let’s Unleash the Facts — a Response to Thomson Reuters’ Web Disclosure Column. If you work in investor relations, make sure you give it a read to ensure you’re getting an accurate picture of the state of disclosure today.


NIRI National Sessions Miss the Mark on Disclosure

June 14, 2010

— by Michael Becker, SVP, Financial Product Strategy

Michael Becker

In my humble opinion, the 2010 NIRI National Conference was a tremendous success, albeit in one area.

The annual conference committee’s courage to tackle hot button issues like the SEC’s Regulation FD Interpretive Guidance is commendable.  However, in its zealousness, I believe attendees were over-served FD, often by ill-informed “experts” and biased parties.

Ill-informed experts and biased parties speaking at NIRI National? Why, yes.

Daniel Kinel of Harter Secrest & Emery LLP, in his session “Fair Disclosure and the Web,” stated that a six-minute delay between web-posting and an 8-K was “simultaneous enough.”  (As an aside, I approached Mr. Kinel and explained why six minutes at 4:00 pm ET is a wide gap — i.e., after-hours trading.  His response: “Good point.”)

How about James Moloney of Gibson, Dunn who believes leveraging notice-and-access news release disclosure for earnings can save an issuer $40 – 50K annually?  (Mr. Moloney, ever heard of a Metro distribution?  It’s only $210).  Mr. Moloney also discussed the newswire upload process, calling it an extra, cumbersome step.  That is a pretty myopic view coming from a person who is paid to protect his clients.  The extra step ensures that material news content is vetted, secure, error-free, properly formatted and disseminated to the markets in a ubiquitous manner.  My hunch: Mr. Moloney will be busy when issuers self-publish content via WYSIWYG tools with errors (spelling, formatting, etc.).

While the web is assuredly more important for issuer communications than ever before, I do not believe there has been a seachange since the late-2008 survey that found securities attorneys favor wire services over corporate web sites for disclosure of material news. Maybe the Moloneys of the world see the Reg. FD Interpretative Guidance issue as a way to increase billable hours? Furthermore, research has shown greater dissemination improves stock liquidity and lowers volatility while enhancing a firm’s visibility; it can even lower the cost of capital.

Finally, how about ThomsonReuters, who spent a pretty penny on its lunch session, just to tell issuers how disseminating to a handful of distribution points via its mechanism is best practice? (I liken it to telling my son to strive for a C because it’s passing.)

It’s one thing to discuss a topic openly in a transparent manner; it is entirely different when NIRI members are plied with inaccurate information over the course of multiple redundant sessions.  For a more accurate look at what NIRI members really feel constitutes proper disclosure, see Neil Hershberg’s recent entry, “Common Sense in Investor Relations.”

In closing, I am young, hungry and ambitious. There is no way I would hitch my wagon to an antiquated business model. Furthermore, I am a realist when it comes to the technology adoption curve and genuinely believe if/when the time comes that another model for material news distribution is better for issuer communications, Business Wire will be right there, doing what we have done for 50 years, evolving to suit the needs of our customers.

Until then, take a step back, look past the self-interested zealots and see the forest for the trees; traditional newswire services today provide the single best method for satisfying Regulation FD disclosure. PR Newswire’s long-time consultant Mark Hynes states it best: “If I believed that they were making buggy whips, I wouldn’t be there.”


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