Five things you should know about investor perception studies

An investor perception study is a proven method of gaining quantitative and qualitative insights from investors. A perception study seeks honest opinions and insights and identifies areas of concern from investors so that the company could update its strategy and tactics accordingly to better serve its customers, investors and key stakeholders and potentially achieve better valuation in the capital markets.

Logistics of an investor perception study


An investor perception study targets an issuer’s institutional audience in the capital markets, including current and previous investors as well as sell-side analysts. Ideally, an investor perception study might even reach out to potential investors and analysts who are involved with peer companies but not the issuer itself. However, given the regulatory and staffing changes in the industry, less people are being asked to do more. The appetite and willingness to participate in an investor survey is much less these days, especially among those who do not have a direct relationship with the company. That being said, a study should at least include current shareholders and sell-side analysts who cover the company.

Building a questionnaire

There are four general areas of questions in a typical investor perception survey; 1) core strategy and business model – questions that are meant to identify investor awareness and understanding of a company’s fundamentals; 2) financial performance and share valuation – questions that are meant to gauge investor satisfaction with execution and their read on share valuation; 3) IR performance – questions that look at the bigger picture of IR, but also at the nitty gritty; and 4) specific topics – if the company is undertaking major projects or trending topics such as ESG and leadership diversity.

Transparency is key

An investor perception study is typically done by a third-party such as an IR agency. Using an intermediary preserves investor honesty and transparency, which is critical to create value from study results and ensure that management hears what they need to and not what they want to from investors.

Benefits of an investor perception study

1) Update strategy and business model: results from an investor perception survey typically are expected to show that investors understand and agree with a company’s overall strategy and business model. There may be specific areas within the overall strategy that investors take issues with, and the study alerts management of these topics so they can better address them. For companies contemplating major undertakings (M&A, delisting, etc.) or in turnaround situations, real-time insights from an investor perception study can be even more helpful in helping management re-think and re-evaluate the situation. It’s not unheard of that a major project can be called off or delayed for a future time if results of the investor perception study are overwhelmingly negative and against the original plan.

2) Identify valuation detractors: if management believe the company’s shares are undervalued, they should most certainly ask investors as part of the perception study and make sure to ask investors for their reasonings either way. What happens next is a win-win situation for the company – if investors agree with management, they will tell management why they think the shares are undervalued. If investors do not believe the shares are undervalued, they will tell management that it’s because new markets are having a hard time taking off or because there is a lack of progress on asset sale and deleveraging. Whatever the case may be, management gain key insights into what investors think about the company’s current valuation.

3) Improve IR strategies and tactics: an investor perception survey can be quite detailed when it comes to asking investors for their opinions of a company’s IR program – asking investors how they feel about the effectiveness of the overall IR program, how investors feel about disclosure of earnings releases, timing of the earnings releases, whether management is making enough efforts being on the road meeting with investors or attending investment conferences etc. These data points are tremendously valuable and help the IR department and management to work together and improve their IR program post study.

4) Learn about your peers: an investor perception questionnaire can be designed to directly compare a company against its peers across a variety of topics and metrics so that management have a better context to judge how they perform over time, both internally and against other players in the space. In addition, investors sometimes make valuable observations about how peers run their business or communicate with investors, which management may have previously been unaware of and could choose to emulate and incorporate as a result of the study.

5) Talk amongst yourselves: findings of an investor perception study can serve as great starting point of internal discussion between IRO, management and the board of directors on issues relating to operations, financials or investor communications and upon which they can improve. Throughout the year, such internal discussions tend to be limited to financial or annual reporting. By doing an investor perception study, a company gives itself additional opportunity to reflect, discuss and strategize for better future outcomes.

In 2016, NIRI (National Investor Relations Institute) commissioned a report on measuring IR program success. Covering 515 IR professionals from company industries, the report ranked perception studies as the second most important metric IR professionals and management at large and mega cap companies used to measure the success of their IR program. For micro and small cap companies, perception studies were also a top five key metric of success.

As mid-year approaches, management should consider planning and conducting an investor perception study to learn about what investors really think about your business, valuation of your shares and your competitors and how you can improve going forward.

When was your last investor perception study?

Grayling NY has over 30 years of experience planning and executing investor perception studies for issuers across market cap sizes and industries. In particular, we are experts at conducting studies for companies with a global shareholder base. If your company needs help with your investor outreach or is getting ready to jumpstart your first investor perception study, do not hesitate to contact Lucia Domville, Managing Director Grayling New York.