Corporate websites are becoming a useful investor relations tool to connect a company to its stockholders, customers and vendors as well as the investing public in this information technology age.

A website enables the public to have fast access to the company’s financial data and information on its products and services for investment purposes. This is vital because speed is of the essence when it comes to making a decision on an investment or purchase of product.

Bursa Malaysia recently required all listed companies to come up with websites that would enhance their presence in cyberspace. It was reported in May that about 20% of the almost 1,000 companies listed on the exchange did not have a corporate website. It was also reported that this requirement was already in place in the more mature markets of Hong Kong and Australia, among others.

This open and transparent business practice is common in the US, making it possible for investors to keep track of a company’s operations and performance. A website also enables a company to reach out to its stockholders, investors, customers and suppliers.

Despite the key role played by corporate websites in the area of transparency, little information is provided on some of these online pages. Several companies provide brief reports just to meet Bursa Malaysia’s requirement, not to cater for investor needs. Corporate websites are low on the priority list, although they cost little to be set up.

One may ask why some of these companies are reluctant to disclose their business activities and performance. The most common reason is not to allow their competitors to know their expansion plans and margins.

But companies need to be open to become more investor friendly, especially when there are so many companies listed on the exchange. Why would anyone want to invest in a company that gives out little information? The investing public will only be encouraged to invest in companies that are open with information and financial data.

One fund manager says: “You want people to invest in your company. You must also provide full and complete information of the company and its operations besides making it easier for the public to understand it.”

While the importance of a corporate website to a company cannot be disputed, the information and data provided must not be outdated and should be made simple for the retail investor to understand. We need timely and helpful information and content to keep investors informed of the company’s business activities and progress.

Glove manufacturers like Top Glove Corp Bhd and Supermax Corp Bhd are good examples of companies with comprehensive websites that provide detailed information of their operations and performance. These counters have been experiencing a rally in their share prices lately, with some attributing this partly to their openness and transparent business practices.

The websites of these glovemakers offer news clippings, annual reports, brokers reports, financial data, the company’s profile and a brief on their directors, among others. Some research houses even analyse some of the information on these websites for their clients.

Retail investors will also find it easy to digest financial data on websites if companies provide graphs and charts as well as earnings and share price comparisons with previous years. With such user-friendly websites, investors need not hunt for reports and data about companies elsewhere.

Quarterly forecasts from research houses as well as regular reviews of the projections will allow investors and the public to know whether the company can achieve its targets. Investors will also be better prepared for bad news, should there be any, and the impact on the company or its share price will not be unexpected.

If companies want to go the extra mile to attract visitors to their websites, the information could be provided in the four major languages, like on the website of Malaysia Deposit Insurance Corp.

Companies could also obtain useful feedback and ideas for their betterment from investors and customers via their websites.

In the case of plantation companies, investors can better track their performance and production if presentations on the output of fresh fruit bunches, crude palm oil and palm kernel come in the form of chart and graphs, with historical monthly figures to compare. Now, plantation companies just provide figures for the current month and potential investors may not want to go elsewhere for more information.

A website is a good platform for a company to advertise itself and to sell its brand name to investors, shareholders, customers and suppliers. This will help enhance investor confidence in the company.

Many listed companies compete for the same pool of money and a website will open up the company to the investing public by providing all the basic information. It will also provide a level playing field for both institutional and retail investors instead of being accused of only providing information to certain categories of people.

Many are against companies holding special briefing sessions for analysts and fund managers without first revealing their plans to the public.

Companies that are afraid their competitors will find out about their products and services and margins could give a general picture of their prospects on the website.

Whether there is good or bad news for the company, the public has to know and a website is the best platform for such a purpose. Although all price-sensitive news should be first reported to Bursa Malaysia for the exchange to put  on its website, the corporate website could provide the details.

Another advantage of a website is that it can open business opportunities for the companies, and the list goes on.

We already have awards for the best annual report in the corporate world. Maybe, it’s time to come up with an award for the best corporate website.

Toh Lye Huat is associate editor at The Edge. Comments: [email protected]

This article appeared in Forum page of The Edge Malaysia, Issue 779, Nov 2-8, 2009