Investor relations via Web 2.0 social media channels. A qualitative study of Middle Eastern corporations and investors
| DOI | https://doi.org/10.1108/AJIM-04-2015-0067 |
| Published date | 18 January 2016 |
| Pages | 33-56 |
| Date | 18 January 2016 |
| Author | Larissa von Alberti-Alhtaybat,Khaldoon Al-Htaybat |
| Subject Matter | Library & information science,Information behaviour & retrieval |
Investor relations via Web 2.0
social media channels
A qualitative study of Middle Eastern
corporations and investors
Larissa von Alberti-Alhtaybat and Khaldoon Al-Htaybat
King Abdulaziz University, Jeddah, Saudi Arabia
Abstract
Purpose –The purpose of this paper is to investigate the use of Web 2.0-based social media for
investor relations (IR), in the Middle Eastern (ME) context. IR is one of the under-researched topics of
the corporate reporting subject area. This study seeks to contribute by investigating social media for
IR in a ME context. It researches the perceptions of corporations, and individual and institutional
investors regarding the phenomenon of social media for IR, given the particular cultural context.
A conceptual model guiding future research is developed out of the analyzed data.
Design/methodology/approach –The research approach is qualitative and exploratory in nature,
as the aim is to analyze perceptions and opinions of participants, in order to develop a theoretical
argument based on these. To this end, the study employs a qualitative methodology and interview data
collection. Data are analyzed using qualitative research coding styles.
Findings –Primary findings are encompassed in the theoretical framework, which theorises the
adoption of social media for investor relation in particular but addresses voluntary corporate reporting
in general. The study determines that there are various factors that support and hinder adoption, such
as willingness to adopt social media for IR and potential risks and benefit, and that there are
anticipated outcomes, such as improved communications between investors and corporations and a
related power adjustment. The new element regarding IR that transpired out of the current study is the
notion of investor empowerment and the directly related fear of lack, or essentially loss, of control.
Originality/value –The ME societies are very interested in social media applications, and utilize
these in a broad range of their daily work and private activities. IR, as part of voluntary reporting, have
been subject of recent debate, as little guidance is available and corporations’practices vary. The
current study highlights these factors in a largely under-researched market, the ME, and focuses a
broader knowledge contribution based on the current findings. Finally, the concept of power is
investigated in both its conventional and postmodern sense.
Keywords Middle East, Social media, Power, Qualitative study, Conceptual model,
Investor relations
Paper type Research paper
1. Introduction
Investor relations (IR) have been at the forefront of recent discussions, as it is one of the
under-researched topics of the corporate reporting community (Macnamara and
Zerfass, 2012; Ragas et al., 2014). Social media is a new tool that allows fast and
convenient distribution of information, thus a potential tool for IR (Macnamara
and Zerfass, 2012). Interestingly, different societies have a different standpoint
regarding such media, as the recent Brunswick survey has found (Golz and Zivin,
2014). In general, social media has spread rapidly across different markets and
countries, amongst which are the Middle Eastern (ME) countries (Askool, 2013). For
instance, social media significantly supported the rise of the Arab Spring mo vement,
and YouTube, Facebook and Twitter enjoy great popularity in the various ME societies
(Askool, 2013; Shirazi, 2013). The current study investigates investors’and
Aslib Journal of Information
Management
Vol. 68 No. 1, 2016
pp. 33-56
©Emerald Group Publis hing Limited
2050-3806
DOI 10.1108/AJIM-04-2015-0067
Received 23 April 2015
Revised 6 September 2015
Accepted 28 September 2015
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/2050-3806.htm
33
IR via Web 2.0
social media
channels
corporations’perceptions of adopting social media for IR, extracting the perceived
outcomes, and highlighting societal and organizational developments that support or
hinder the adoption and utilization of such applications.
Corporations’IR commonly take place via a dedicated section of the corporations’
webpage. The format, while informative, is typically static, and, while frequently
updated, does not allow active, real-time communication between investors and
corporations. The current study investigates the potential adoption of interactive
technologies, allowing a dialogue between a corporation and its shareholders.
In particular, we focus on employing Web 2.0-based technology, concentrating on
various forms of social media to maintain IR. In general, the utilization of Web 2.0
technology has led to a competitive advantage and allowed companies to reach out to
consumers through new social media (Vuori, 2012). Web 2.0 denotes the underlying
technology that gives rise to social media applications. IR are only maintained on a
limited level through social media, with most companies focusing on sharing
information regarding share price, financial statement publication, and in some
instances updates of annual general meetings (Yanjie and Wan, 2013).
In the USA, the Securities and Exchange Commission (SEC) realizedthe importance of
such Web 2.0 communication channels and issued a ruling in 2013 that allows
corporations to utilize social media for IR, as long as corporations comply with the
Regulation Fair Disclosure, which says that corporations have to use a medium that
allows for information to reach as many users as possible without favouring one group
over another,and as long as investors are alerted whichchannel a corporation will use for
information dissemination (SEC, 2013). However, depending upon the relevant
legislation, IR are closely monitored and the use of social media for IR is not
automatically a tool that can be used for unlimited disclosures, for instance in the EU
(Virtanen, 2010).With regard to ME countries no particular ruling addresses IR via social
media, and the DubaiFinancial Market guidelines explicitly recommend theuse of social
media for financial information dissemination, as these allow for maximum market
penetration (Dubai Financial Market Guidelines (DFM), 2014). Other ME financial
markets have not issued such guidelines, according to most recent online searches.
Furthermore, there is a lack of academic studies investigating IR in the ME, which
the current study seeks to alleviate. It adopts a qualitative approach.
The broad research questions asked in this study are:
RQ1. What is ME investors’and corporations’interest in and perception of
maintaining IR through social media channels?
This question aims to extricate what participants, investors and corporate
representatives think of social media in the context of IR communications . Is social
media already being used for IR? To which extent is social media applied, and if not is
there any real interest in doing so? How do investors think of such medium of
communication, as they are part of the driving force for adopting and maintaining such
medium of communication? What are the anticipated benefits and drawbacks of
adopting such practice?
RQ2. What are the factors that support or hinder the adoption of social media
for IR?
This question seeks to determine whether in the participants’perceptions there are any
factors that are particularly supportive, or particularly confounding, regarding the
adoption of such medium of IR communication. Importantly, none of the ME countries
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