Insight
Will AI tools create homogeneity in corporate reporting?
12th February 2025
As an industry, Investor Relations has changed profoundly for the better in the last 20 years – much of this driven by increased professionalism and highly skilled individuals. But technology has also been a significant influence – both in data gathering and communication dissemination. And the latest developments around AI are set to be transformative again, leaving no stone unturned in reviewing what companies say and how they say it. It is therefore worth considering if this going to help or hinder transparency and proper engagement?
Is there a benefit to checking sentiment analysis for results scripts?
It has long been good best practice to pre-plan and rehearse likely Q&A ahead of results and capital markets events and to be crystal clear on what messages the CEO/CFO want to get across to investors. AI tools are now impacting on this in several ways. Many companies now run the drafted script and Q&A through an AI system to generate a “sentiment analysis” score. It’s a useful measure to make sure you are not inadvertently projecting a more positive or negative tone than you had intended to. Also to track against your score at the last results – as this sequential change is one measure watched carefully by investors.
Investors are taking it a step further to instantly analyse “unusual” Q&A answers
But investors are now starting to take this a step further. Using ChatGPT 4 (or similar systems) and some careful prompting, they can use AI to analyse if the answers given by the CEO/CFO are “usual” or “unusual” and if the latter then to dig deeper as to specifically what and why. Unsurprisingly overly long answers are a red flag as are lengthy discussions around non-financial topics – both a common diversionary tactic! And of course sell-side analysts and investors would no doubt notice these things too in time. But using AI allows almost instant analysis, from current or historical meetings, for multiple companies at the same time and it can be done from written transcripts or audio recordings. So a good tool for investors, perhaps less so for corporates leaving nowhere to hide for the executive team!
Use AI to support, not control – generate a conversation not a generic dictation
The obvious corollary from this, as has happened in other areas of public life (politics etc) could be increasingly tightly scripted responses, homogeneity between different companies responding to similar questions and potentially less transparency and less engagement. Or at least less in the “public” arena. This may push more open discussions even further into the private domain of institutional investor meetings – leaving both smaller and retail investors out in the cold. So ironically a move to use AI tools to increase information, could have the reverse impact. So although there are clear benefits to corporates to understand how their communications will be received, its also important that comms teams don’t get sucked into heavy reliance on this sentiment score analysis and using generic responses and lose sight of the underlying purpose – open and honest engagement that generates a conversation not a dictation.
Board packs are becoming too long, accurate (verified) summaries are essential
Another development on the corporate side, is the significant rise in the use of AI to summarise Board packs. The Board are generally heavily reliant on these information packs for full updates on all aspects of the business, but over time these tomes have ballooned, in many cases swamping directors with too much detail and little clarity. And frequently far too much backward looking information and not nearly enough forward looking. Of course the effective IRO would say just write them better! And there is a lot to be said for that! But the reality is for many companies and time pressed individuals, there is a great temptation to use tools such as AI to do the summarising for them. And this might be very effective, but only as long as it is verified and checked thoroughly. Otherwise, as everyone is increasingly aware, the potential for “hallucinations” and prejudiced or biased summaries could lead to poor decision making and possibly even failure to follow regulations.
A potential double whammy of reducing transparency?
Potentially therefore these AI summaries might be limiting transparency within corporates as significantly as the tools being used by external observers. A double whammy of reducing transparency, that does not bode well for markets and investment! It is critical then for IR teams to ensure that they do not become confined by focusing too heavily on “script scores” and “word tracking” and that the information they are disseminating both internally and externally is accurate and informative and properly enhances understanding of the company and its activities.
Using AI constructively is the future, but common sense should always prevail!
I have always been a supporter of new innovations in IR and I believe AI will have some fantastic applications that prove useful to all and also that we should embrace change! But at the risk of sounding old fashioned – total reliance on one system doesn’t usually work. Use these new tools judiciously and apply common sense as well and they can be transformative. Jump in with no checks and balances and you will probably trip up!
Do get in touch if you want to know any more about using the fascinating developments in AI most effectively in IR communications.
