Corporate disclosures on social media
Are companies ready for that, and should Bursa Malaysia be implementing this?
THE US Securities and Exchange Commission (SEC) now allows corporate disclosures on Facebook, Twitter and other social channels. But it comes with a limitation. The companies listed in the United States can now use Twitter, Facebook or other social media channels to communicate with shareholders, as long as they tell them upfront which outlets they would be using.
What the SEC does not want is one set of investors having an advantage if there is selective disclosure of important information. So, it has set some of the rules upfront so as to avoid unfair advantage.
By giving the go-ahead, the SEC now recognises that social media is a suitable medium for communicating with investors.
This gives companies yet another channel to reach out to shareholders apart from their websites. This deci- sion to allow the usage of social media sites follows an investigation into whether Netflix chief executive officer (CEO) Reed Hastings had violated any rule when he posted that the service had exceeded one billion hours of video watched in a single month on his personal Facebook page last July.
Netflix, as it claims in its website, is the world’s leading Internet television network with more than 33 million members in 40 countries enjoying more than a billion hours of TV shows and movies per month, including the original series.
The SEC is not pursuing civil charges against Hastings, but the ruling provides clarity on the role of social media in corporate disclosures.
It is the way to go in the future and good for companies to draw people to their Facebook page or Twitter account and introduce other information such as marketing drives to them. It also allows for immediate feedback to what the disclosures are.
Shareholders will now have an opportunity to state whether they like or dislike a particular disclosure by merely clicking on the “Like” button. That’s instant feedback without elaboration.
Are companies ready for that, and should Bursa Malaysia be implementing this?
If you look at it from a Gen Y perspective, then it is a resounding “yes.”
It is interesting yet tedious not just for companies but also the shareholders, hence a central depository is still in vogue.
For now, it is clear that Bursa is the depository for all corporate announcements. While it is good, it would really help for Bursa to make it mandatory for companies to summarise their announcements into one or two pages on top of the 15 to 16-page announcements that come in the Queen’s English.
In this world where timely dissemination of information is key, companies are still working on oldfashioned templates.
The summarised version would help us see the big picture at a glance. And if someone wants more information, then they could read the 15 to 16-page disclosure. In the realm of social media, summaries would be perfect.
To emulate what the SEC is implementing would mean Bursa may have to take into account the Internet penetration rate in the country, because if companies were to use Twitter or Facebook, then the last thing any shareholder would want is to miss out on an announcement because there was no reliable Internet connection.
There are already some CEOs using Twitter and Facebook to communicate with their customers, with some even disclosing information beforehand. It is difficult to control, but for now, a central depository of information is still necessary, as checking through different sites can be timeconsuming.
Time is of the essence in the world of share trading and nobody wants to be at a disadvantage in terms of corporate disclosures. The change is inevitable, and some day, Malaysian companies will be allowed to disclose via Twitter and Facebook. The question is: When?