Aristotle is said to have coined the phrase “nature abhors a vacuum.” Far be it from me to question Aristotle, but while he was right, I think his view was too narrow — the abhorrence of vacuums goes far beyond nature and extends to investors and the media, among many others. Companies that hide behind closed doors and ignore or deny requests for information from investors and the media run the risk of finding themselves without a welcoming audience when they eventually choose to communicate.
Let’s be clear – any securities lawyer worth his or her salt knows that sometimes the best thing to say is “no comment” or its equivalent. I’ve given that advice very often. The problem is that in my experience, most of the time when a company says “no comment” or “we don’t respond to rumors,” the rumor is likely true. Conversely, when the rumor is just that, a rumor, companies tend to squeal like a proverbial stuck pig. For some reason, companies that engage in this sort of behavior fail to understand how it plays out among investors and the media.
It has also been my experience that securities attorneys all too often think they are smarter than their clients’ communications and investor relations advisors and disregard the advisors’ recommendations. Even a smart lawyer isn’t likely to know more than these advisors about IR or communications – in fact, many lawyers are terrible communicators. So it’s worth listening to and considering those advisors’ recommendations instead of dismissing them out of hand. Personally, I’ve learned a great deal from investor relations and communications advisors.
Continue Reading Aristotle was right (or, “tell your story or someone else will”)