Should European banking bosses keep their mouths shut? | FT Alphaville

Should European banking bosses keep their mouths shut?

PR firm Hill & Knowlton has begun to dabble in an arena usually reserved for its banking clients: modelling.

As the Gorkana PR service reported on Thursday:

Hill & Knowlton in conjunction with Commetric have developed a model, Equity Prioritiser, that aims to quantify how much [media] coverage impacts share price. Here are some of the insights of the system so far: CEO statements in the pharmaceutical sector are associated with a positive share price movement of 20 basis points, whereas when a banking boss opens his mouth the stock is typically down 66 basis points. Large caps are now twice as sensitive to cost cutting news as two years ago. The banking sector has grown particularly sensitive in the past couple of years – particularly on topics such as company asset sales, nationalisation (but did anybody ever mention this pre-crunch) and dividends.

“Corporate reputation research is badly in need of fresh and challenging thinking. This service is not the ‘grand unified theory’ of corporate reputation, but it does represent a significant innovation that will improve the influence of corporate reputation professionals in the board room”, said Stuart Smith, Head of H&K’s Corporate Practice across EMEA. “We have already seen a positive response from a number of companies with which we have been piloting the service.”

It strikes us as somewhat counter-intuitive that PR professionals would promote a product that suggests some of their clients shouldn’t talk to the media, ever :

The insights provided by both services can be leveraged by senior executives and communications, IR and financial PR specialists. For the first time, companies can inform their communications planning with data showing how media coverage directly affects the company’s share price. The data will also serve as a means of measuring the effectiveness of existing communications strategies and activities. As a result, the C-suite and the communications function can work more closely to determine how news will be received by the financial markets and subsequently adapt their communications activities accordingly.

Reductio ad absurdum, some clients should surely consider firing their comms teams if they wanted to maximise share price performance.

Then again, you know what they say about models