There are many different ways to connect and communicate with shareholders: press releases, SEDAR filings, earnings calls, road shows, the list goes on. Recently, public companies have been utilizing social media sites such as Twitter, Facebook and blogs to communicate information to the public about their business and operations.
Social media continues to be a bit like the Wild West: it is a place of opportunity, but should be entered with caution. The key is to remember that the same rules apply to social media that apply to all corporate disclosure.
The purpose of this bulletin is to discuss the use of social media as a news dissemination tool and shareholder communication means while operating within the securities regulatory framework.
Benefits of Social Media
A study published by the Ross School of Business at the University of Michigan in July 2010 entitled "The Impact of Managerial Dissemination of Firm Disclosure" (the "Ross Study") suggests that social media can help companies overcome a lack of media and analyst coverage while improving liquidity for their stock. With investors wanting real-time access to information as it happens, companies can benefit from harnessing the power of social media to connect with their current and potential investors.
Traditional news sources are limited as to the amount of information they can adequately provide to the public, and therefore tend to focus on larger, more visible companies. Social media, such as Twitter, can be utilized at minimal cost to overcome the dissemination constraints of the news services.
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Source: lexology.com
By: Fasken Martineau DuMoulin LLP and Caroline E. Clapham
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