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- W282427190 abstract "Coping when an analyst says, Sell! IR pros: when the news is bad, don't stonewall -- provide information For investor relations professionals working to optimize the value of a company's stock, the single most frightening word stock analysts can utter in their recommendation reports is: sell! But it happens -- and how IR practitioners react to the bad news can, in many cases, determine their future relationships with analysts. The absolute worst thing an IR specialist can do to retaliate, analysts and IR executives say, is to choke off or impede the flow of information to analysts who issue negative reports. However, some analysts recently quoted in an article appearing in The New York Times contend that such a practice is becoming increasingly common -- especially when it's a sell recommendation. IR specialists and analysts interviewed by PRJ confirm that the practice does exist, but they stress that such intimidation tactics are the exception and not the rule. It happens, but not very often, says Bonnie Billings, vice president/stock analyst at Tucker Anthony, a Boston-based brokerage house. Johnnie D. Johnson, managing director at Georgeson & Company, Inc., a public relations firm specializing in investor relations, said: I've been in IR since the '70s and it is very seldom that I hear of this practice. A firing and subtle reprisals The most widely publicized incident involves Marvin B. Roffman, a former analyst at Philadelphia-based Janney Montgomery Scott Inc., who alleges that he was fired after issuing an unflattering report on billionaire Donald Trump's Taj Mahal casino in Atlantic City, New Jersey. That incident, of course, illustrates a worst case scenario. In most cases, some analysts contend, the punishment inflicted on them is far more subtle: phone calls are not returned; financial information arrives late; one's professional reputation is called into question. Your name may fall pretty far down a company's list, says Billings. All of these reprisals are legal, sources say. Although it's impossible to pinpoint any one reason why IR departments would operate in what one IR practitioner called a short-sighted manner, numerous theories abound. The main motivation is to avoid getting hit with another bad report. One analyst contends that it is simply a lack of sophistication on the part of a small group of IR professionals. But according to Debra Kelly, vice president, corporate affairs for The Quaker Oats Company, in Chicago, the problem arises when IR practitioners lack answers. Often, they don't want to talk about a problem until they know exactly what the problem is and have a way to correct it, and that takes time, she theorizes. very hard to talk to people when you don't have answers. It's very understandable, but unacceptable. IR pros condemn tactic Although it's not against the law to make life difficult for analysts who don't sugar-coat their recommendations, one message comes out loud and clear: both analysts and IR practitioners condemn the use of such bullying tactics. totally inappropriate behavior, says Johnson. Whoever is doing this is getting poor advice, adds Patricia Travaline, vice president of IR at Sharon Merrill Associates, a Boston-based public relations firm. `It would be absolutely self-defeating. …" @default.
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- W282427190 date "1990-07-01" @default.
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- W282427190 title "Coping When an Analyst Says, Sell! (Securities Analyst)" @default.
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