Road Show Disadvantages and An Alternative

For this weekend’s Investor Relations homework, we discussed the use of conference calls and road shows in the lives of typical investor relations officers. The chapters in our text discussed the different benefits and procedures to be followed during a typical conference calls. After learning about road shows in our textbooks and from our speaker’s presentation in class I decided to further research them.

An article by John Palizza discussed the repetition and boredom that are often associated with road shows. He discussed the amount of endurance and energy necessary to sustain the breakfast meeting, 3 morning meetings, lunch meeting, 3 afternoon meeting and then a dinner meeting and flight to the next city for another day of the same tedious schedule. While the days are long, the also will incorporate the same presentation given to each investor throughout the day. The repetition of these presentations would generally send people into repeat with little thought about the information they are presenting to investors.

Other disadvantages discussed include the task of answering the same questions over and over. Each investor will have the same thoughts and confusion after a presentation, which will require the presenters to deal with these questions in a manner that shows interest and concern with the investors problems. While your presentation are often boring to repeat, much of road shows is touring with the executive officer of the company, who is of far more interest to these investors than the IR officer. The bordem and exhaustion that seems to be associated with these road shows provoked me to search to see if other alternatives have emerged due to IR officers dislike of a road show schedule.

While Palizza discussed that road shows will always be necessary, Suzanne Galante has an article about companies decision to participate in virtual road shows. While these are less personal, they are known for saving money and enabling company information to reach more people. Typically people with less money to investor would be shut out, yet with this method of viewing company information from a personal home or office through PC, this information is becoming available to people who had never accessed the information before.

An example discussed in the article is N2K or a company that delivers programming to consumers online. With the business being on the internet, the company decided that it would be logical for their road show to take place on computers as well. The online road shows enable people viewing to send in questions, along with view past information in the archives.

While these virtual roadshows will never be used by the larger companies desiring more of a personal relationship with investors, for smaller companies with fewer funds, virtual road shows save them money and provide them with opportunity to distribute company information to wider audiences. Road shows seem quite tedious and boring for those involved, yet the close relationships formed with investors because of them is defiantly worth the time and energy required.