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MISSION:INTANGIBLE, the blog of the Intangible Asset Finance Society, offers critical comments on intangible asset, corporate reputation, and finance; supplemented by quantitative reputation metrics. Intangible assets include business processes, patents, trademarks; reputations for ethics and integrity; quality, safety, sustainability, security, and resilience; and comprise 70% of the average company's value. MISSION:INTANGIBLE is a registered trademark of the Intangible Asset Finance Society.

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Broadridge: What investors want

C. HUYGENS - Wednesday, October 02, 2013
“What do investors look like, and how do they vote? We are starting to get data on that, explains Broadridge Financial Solutions’ (NYSE:BR) Bob Schifellite, president of investor communications solutions in the September 2013 issue of NACD Directorship. The "aha" is that equity investors are customers -- of securities -- and like other customers, equity investors express their expectations mostly by buying or selling shares.

Through these direct behaviors, they establish stock prices and earnings multiples. Firms with superior reputations benefit from higher multiples on earnings. Poor reputations tend to result in higher stock price volatility and greater vulnerability to headline risks.

The good news: big data market research comes to Wall Street. According to NACD Directorship, "Broadridge has partnered with PwC to produce reports called ProxyPulse that analyze and synthesize vast amounts of shareholder voting data. The reports—published on the website ProxyPulse.com—study stock ownership and voting results by company size as the proxy season progresses. Based on its analysis of 2,858 shareholder meetings from Jan. 1 through May 23, 2013, ProxyPulse® reports that voting outcomes vary by company size and can be affected by ownership mix, communications approach, and ongoing shareholder dialogue."

The fly in the otherwise unfettered ointment: the big data model of statistical correlations does not actually answer the big data question of what investors and other stakeholders expect and are prepared to reward (other than share price appreciation.) Yes, the big data model has room for more big data, but it's a good starting point for Broadridge.

As for what stakeholders expect from Broadridge, The Steel City Re® reputational value metrics, drawn from big data, show above average CRR ranking (Reputation Premium) and return on equity (ROE) relative to the 33 peer members of the Data Processing sector. The data also show that while stakeholders were briefly surprised in August by events at the firm as evidenced by the spike in current RVM volatility (Consensus Trend) to more than 4%, things are now settled and all seem sanguine with the convergence of their expectations and reality. Stability is projected at the 78th percentile. What's also clear is that there is significant Reputation Premium still on the table -- perhaps the next generation of ProxyPulse -- say ProxyPulsePlus -- will better help investor relations professionals guide investors better and, at the same time, boost Broadridge's reputation in a way shareholders can both appreciate and value.


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