Investor relations at Danisco: Learnings from Japan

Camilla Nellemann Jensen

Student thesis: Master thesis

Abstract

This thesis examines how Danisco practices investors relations (IR henceforth) compared to 14 Japanese IR award winning companies, acknowledged by Japan Investor Relations Association (JIRA winners henceforth) in order to determine whether Danisco might benefit from implementing Japanese IR practices. Public companies (companies henceforth) such as Danisco need to attract capital to ensure growth. The competition for external funding is fierce, and the degree of success of companies' external communication may impact on their inflow of investments. In this way, efficient communication with analysts and investors (stakeholders henceforth) contributes to the sustainability of companies. Recognizing the importance of IR, the majority of companies has an IR function, specialized in interacting with capital market actors. In order to enhance and ensure high efficiency of IR, companies are advised to continuously evaluate their performance as well as consider how other companies conduct IR. In particular, it is relevant to monitor the IR performance of companies, operating in different industries and cultures, as the way of conducting IR among these companies tend to be markedly different. Given the fact that Danisco aims at broadening its shareholder base, it is relevant for Danisco to understand how IR is performed abroad e.g. in Japan. Insight into JIRA winners' interaction with their stakeholders might help Danisco develop IR practices that appeal to Japanese stakeholders and eventually attract investments from Japan. This thesis employs a functionalist approach aiming at suggesting practical implications for Danisco's IR work based on a comparative study of Danisco and JIRA winners. Firstly, insight into the essence of IR, stakeholders of IR and trends in IR practices was gathered through the literature in this field and an expert interview. Secondly, information on how IR is conducted at Danisco and JIRA winners was achieved deductively through structured interviews and by examining the companies' websites. To understand the empirical evidence derived, the strategic credibility model by Higgins et al. (1989), explaining how companies build strategic credibility, was applied. Thus, it becomes clear how Danisco and JIRA winners build strategic credibility differently. This thesis concludes that being listed on several stock exchanges is common among JIRA winners. Additionally, IR is organized differently at JIRA winners and a number of different IR activities are identified. Finally, several of these IR activities are recommended for Danisco. Foremost, in order to enhance strategic capability, involving the company's ability to explain its competitive situation, Danisco is advised to show its CSR report in the IR section of its website danisco.com, reflecting that social concerns complements profit making. Additionally, the following IR activities are recommended to enhance corporate communication, concerning the way Danisco interacts with stakeholders: conducting perceptions studies in order to enhance an open dialogue with stakeholders; constructing a Danisco glossary, helping website visitors understand Danisco terminology; uploading an explanation of how to purchase Danisco's shares to danisco.com, for the convenience of private investors abroad; organizing IR information on danisco.com in an IR archive; establishing a Danisco Channel, performing video news related to the company and uploading transcriptions of Q&A sessions following Danisco's IR events to increase transparency. The dotted line attached to corporate communication, reflects the need for Danisco to join in on the trend to communicate IR via social media in case this should become mainstream. In order to enhance Danisco's CEO credibility, the company is advised to upload a Message from CEO or similar statement to danisco.com, in line with the IR trend to personify companies with their CEO. Finally, this thesis recommends that Danisco becomes acquainted with JIRA winners' different IR terminology in order to avoid cross-cultural misunderstandings when communicating with Japanese stakeholders.

EducationsMSc in Business, Language and Culture, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2011
Number of pages95