In India, retail investors are at a disadvantage compared to institutional investors, in terms of the quality and volume of information supplied by companies. This point was picked up in the recommendations on corporate governance that were recently submitted by the Institute of Company Secretaries of India to the ministry of corporate affairs. One of the recommendations in the report is that the investor relations meet after declaration of financial results should be compulsorily webcast in the case of companies having a market capitalization of more than Rs1,000 crore.
Most companies hold a conference call or an analyst meet after results, either every quarter or half-yearly. A few companies open these calls to all who are interested, displaying the numbers and passwords for the conference calls on their websites. Very few among those which hold analyst meetings telecast a live webcast of the proceedings. But most companies keep these calls private to the institutional investing community. Some companies do upload the printed transcripts of these conference calls on their websites, but with a delay. A case in point is DLF Ltd, which hosted a call for analysts on Thursday evening and has not been displayed on the transcripts of that call on its website. DLF, of course, is the most recent example of a common practice in India.
The importance of these conference calls or analyst meets stems from the interaction between management and analysts. Apart from prepared remarks by the management, the question and answer session reveals information not otherwise available in the results or other updates. This information is often material and even price-sensitive. If institutional investors have access to this information, there is no reason why ordinary investors should be denied that privilege.
In developed countries such as the US, it is standard practice to provide a webcast of the call or meeting on the investor relations site of the company. Investors can listen but not ask questions. It will require little effort for Indian companies to stream the audio or video of their calls or meetings on their respective websites.
It would appear that regulatory intervention by the Securities and Exchange Board of India is the only way to remove the divide between retail and institutional investors.
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