CHALLENGES AND OPPORTUNITIES ARISING FROM THE EMERGENCE OF SOCIAL MEDIA IN CORPORATE INVESTOR RELATIONS CONTEXT : Hype or relevant interaction?
Mustalahti, Annika (2018-06-19)
CHALLENGES AND OPPORTUNITIES ARISING FROM THE EMERGENCE OF SOCIAL MEDIA IN CORPORATE INVESTOR RELATIONS CONTEXT : Hype or relevant interaction?
Mustalahti, Annika
(19.06.2018)
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Turun yliopisto
Tiivistelmä
Social media is one of the most significant Internet-related phenomena that has emerged in the recent decade. Social media has had a significant impact on the marketing, communications and sales activities of companies. In the recent years, the influence of social media has also extended to investing and investor relations. As a result, social media channels have been debated as possible new tools to reach especially private investors. But is this only hype or do the channels truly have potential in developing the relationships further? To date, there is very limited research on the subject. On its part, this study aims to fill this gap, the purpose being to explore the use of social media as part of the investor relations practice of listed companies in Finland. The following sub questions are introduced: 1. current state of investor relations and dominant changes in its landscape; 2. what kind of opportunities or benefits can social media bring to investor relations, if any and 3. what kind of challenges can social media oppose to investor relations, if any.
The theoretical framework consists of theories in social media and investor relations. Qualitative research methodology is applied due to the novelty of the subject and lack of previous research, and the research seeks to examine the subject in-depth. Semi-structured interview was chosen as the research method. The five interviewees were responsible for investor relations in various listed companies in Finland. What the companies had in common was a strong consumer focus; this is in accordance with the theoretical findings that the highest relevance of social media likely exists amongst individual investors who are often also customers of the companies.
According to the results, social media has an increasing role in the investor relations channel mix. Changes impacting the current state most include regulation, globalization and technological advancement. Social media is seen especially beneficial in attracting current and potential private investors, as they are already active in the channels. From the corporations’ perspective, social media is considered as an easy, informal and cost-effective channel. The biggest challenges include monitoring and participating in the continuously evolving channels and discussions. Social media is difficult, if not impossible to control; therefore, companies need to be aware of the possible impact of misinterpreted or misleading information on the company’s brand or share valuation. Companies are still in the early stages of creating social media strategies and deciding which messages to spread in which channels to use to reach the audiences. Naturally, compliancy with regulation and policies needs to be ensured at all times as it is the core objective of investor relations.
The theoretical framework consists of theories in social media and investor relations. Qualitative research methodology is applied due to the novelty of the subject and lack of previous research, and the research seeks to examine the subject in-depth. Semi-structured interview was chosen as the research method. The five interviewees were responsible for investor relations in various listed companies in Finland. What the companies had in common was a strong consumer focus; this is in accordance with the theoretical findings that the highest relevance of social media likely exists amongst individual investors who are often also customers of the companies.
According to the results, social media has an increasing role in the investor relations channel mix. Changes impacting the current state most include regulation, globalization and technological advancement. Social media is seen especially beneficial in attracting current and potential private investors, as they are already active in the channels. From the corporations’ perspective, social media is considered as an easy, informal and cost-effective channel. The biggest challenges include monitoring and participating in the continuously evolving channels and discussions. Social media is difficult, if not impossible to control; therefore, companies need to be aware of the possible impact of misinterpreted or misleading information on the company’s brand or share valuation. Companies are still in the early stages of creating social media strategies and deciding which messages to spread in which channels to use to reach the audiences. Naturally, compliancy with regulation and policies needs to be ensured at all times as it is the core objective of investor relations.