America’s public companies should open up the “last frontier of closed discussions with investors” and allow media representatives and private individuals to listen in, Financial Relations Board chairman Theodore Pincus told the American Society of Corporate Secretaries last week.
The corporate teleconference, the main avenue in today's investor communications with Wall Street, should be "democratized" and opened up to reporters and individual investors who have long been barred from this venue by most companies, he said. His remarks came after several pronouncements from the Securities & Exchange Commission expressing discomfort with the exclusive “analysts-only” nature of many conference calls.
The speech also came in the same week that the National Investor Relations Institute released a survey indicating that its members are increasingly willing to allow individual investors and the media to listen to live conference calls. Of 490 members surveyed, 412 (84 percent) said they conducted conference calls with analysts, 55 percent said they allowed individual investors to listen in, and 42 percent allow the media access. Those numbers are up from 29 percent and 17 percent last year.
“This substantial increase represents a sea change in the recognition being given to the needs of individual investors and the media for real time access to corporate information in today’s investment environment. Great credit goes to the investor relations officers for convincing their senior management of the importance of providing equal access to corporate information to all investors.”
Another 20 percent are considering giving access to individuals, and another 17 percent are considering giving access to the media.
“If the indefatigable Bull Market of the 90s is driven partly by an unprecedented level of investor confidence, this in turn is inspired by a new degree of transparency among U.S. public companies,” said Pincus. “Today, more than ever, top management is living in a goldfish bowl, and getting used to the water.”
Pincus pointed out that the teleconference was once merely a convenient, occasional means of assembling a few key investment analysts on the phone with corporate management for a news recap and background discussion.  Today, however, he said, the teleconference has become “the most important and effective way for public companies to explain the news instantly, broadly, and completely—and generate understanding and confidence.”
Thanks to modern telecom technology, companies today typically brief 50 to 500 investment professionals worldwide in a free-flowing discussion within hours after the news is released.
However, Pincus warned that teleconferences still are not open and timely enough.  “The majority of public companies today are still reluctant to take the final step to level the playing field and allow individual investors and media to participate in the teleconference—at least in a listen-only mode,” he told the audience.
Companies can benefit from a broader audience, he added.
“Look at any company whose p/e multiple has consistently outperformed its peers and you'll find a company that, through thick and thin, telegraphs its expectations and aspirations through an aggressive open door policy, seeking a broader investor base.  We estimate public companies will spend a record $11 billion this year on that effort—and part of this is to win friendship and cooperation from the same editors and reporters who are currently complaining bitterly over exclusion from teleconferences!”
In a recent survey, the National Investor Relations Institute reported that only 35 percent of its surveyed companies allow both individual investors and the media on teleconferences. 
“While companies typically use great care in the planning of these forums, anticipating most questions likely to be raised and avoiding accidental leakage of inside information, the simple fact is that a wide open teleconference—with reporters listening—would be the best insurance against any likelihood of selective disclosure.  Moreover, since many now offer free access to a recorded replay, is there any real difference if individuals or media were to listen in silence to the real thing?"
Beyond legal safeguards, there is also an ethical issue, Pincus believes. Through the use of the teleconference and Internet, companies today have really created their own proprietary news media, and with that advantage comes the responsibility to use it fairly. “How equitable is it for companies to huddle with big-bucks investors but exclude the smaller investors who are advised and guided by those favored few?”