FTI Consulting’s Corporate Issues Study Finds That Investor Confidence Provides Companies with Permission to Operate in Tim...
31 March 2016 - 10:30PM
FTI Consulting, Inc. (NYSE:FCN), the global business advisory firm
dedicated to helping organizations protect and enhance their
enterprise value, today released the first installment of the
Company’s Corporate Issues Study, which takes an in-depth look at
the role investor confidence plays when it comes to evaluating a
variety of corporate issues.
The study, which is derived from a recent FTI Consulting survey
of more than 300 institutional investors, demonstrates that when
investors have confidence in a company, that company receives
significant permission to operate when faced with a critical event,
issue or transaction. This confidence is in large part driven by
sustained and articulate communication strategies. Conversely, when
that confidence is not built ahead of time, investors assume a
decidedly skeptical stance when evaluating the company’s likelihood
for success.
“Companies experience a broad variety of inflection points
throughout their lifecycle – all of which can dramatically impact
enterprise value,” said Edward J. Reilly, Global Chief Executive
Officer of the Strategic Communications segment at FTI Consulting.
“While a lot of focus is placed on what is done in that moment, our
study confirms the significant role that confidence plays in a
company’s ability to execute on its strategy. This speaks to the
importance of proactively building that confidence ahead of time
through communication and engagement.”
The first installment of the study considers mergers and
acquisitions (“M&A”), initial public offerings (“IPO”),
spin-offs and shareholder activism. The second installment of this
research will examine three additional corporate issues: executive
transitions, regulatory change and crises.
Some key findings from the first installment of the study
include the following:
- Investors are 46 percent more likely to be very concerned with
a transaction with limited cost synergies if they are not confident
in a company’s ability to execute deals;
- Investors are less likely to be very concerned and more likely
to support activist pressure to engage in M&A (38 percent)
spin-off or sell assets (23 percent), change capital allocation
policies (44 percent) or add new board members (63 percent), when
they lack confidence in management; and
- Investors are 56 percent more likely to be concerned about high
debt leverage for an IPO when they lack confidence in the company
and management.
The Corporate Issues Study dovetails FTI Consulting’s 2014
Enterprise Value Study, which found that confidence is the key to
influencing behavior and driving stakeholder action. For example,
the study showed company confidence is linked to decision making
among employees to join or stay at a company, customers to buy
products and services, investors to purchase and hold stock in the
company, and policymakers and citizens to advocate for the company
in their communities.
The full Corporate Issues Study from FTI Consulting, along with
infographics and other insights can be accessed here.
Research MethodologyThe Strategic
Communications segment at FTI Consulting executed the primary
research, surveying more than 300 institutional investors
worldwide. FTI Consulting developed a split sample survey approach
whereby participants were randomly selected for two groups. This
was done for each confidence related question. The questions posed
to each group were identical with one exception: one group was
asked to answer the question about companies they were confident
in, the other about companies they were not confident in. Results
were then compared and the differences (delta) between the means of
both groups were calculated. Statistical analysis was then
performed on the data to ensure that the differences were
statistically significant at the 95 percent confidence
level.
About FTI ConsultingFTI Consulting, Inc. is a
global business advisory firm dedicated to helping organizations
protect and enhance enterprise value in an increasingly complex
legal, regulatory and economic environment. With more than 4,600
employees located in 28 countries, FTI Consulting professionals
work closely with clients to anticipate, illuminate and overcome
complex business challenges in areas such as investigations,
litigation, mergers and acquisitions, regulatory issues, reputation
management, strategic communications and restructuring. The Company
generated $1.78 billion in revenues during fiscal year 2015. For
more information, visit www.fticonsulting.com and connect with us
on Twitter (@FTIConsulting), Facebook and LinkedIn.
FTI Consulting, Inc.
1101 K Street NW
Washington, DC 20005
+1.202.312.9100
Investor Contact:
Mollie Hawkes
+1.617.747.1791
mollie.hawkes@fticonsulting.com
Media Contact:
Nicole Madison
+1.212.850.5647
nicole.madison@fticonsulting.com
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