What the boss pays for when hiring an IR specialist is not just a glib tongue.

Listed companies spend funds on maintaining investor relations teams, holding successive roadshows, and staging press conferences and performance briefings in rotation. They keep talking nonstop throughout the year, yet their stock prices still fall as they are supposed to.

Business leaders cannot wrap their heads around this: they have poured in considerable money and said countless words, why does the market still not appreciate their efforts?

Do not rush to blame the market first. Ask a most fundamental question: when a company explains itself, who is it talking to? Most people would answer "to the market", but Zhiyuan believes the answer is exactly the opposite.

We have to start with two terms: disclosure and explanation.

Financial reports are the official archive of a company's statements. They record the full-year operation results, revenue, profit, and existing risks in black and white, then publish the documents online. This whole set of actions is called disclosure.

There is still a long way to go after disclosure. The mission the regulator sets for interactive platforms can be summed up in one sentence: "Help listed companies interpret the already disclosed matters in plain language".

Pay attention to the word "interpretation". Disclosure means putting the information on the table, while interpretation means making it understandable to people. There is a whole long gap between the two.

No one walks this gap, and the announcements lie untouched in the database with no one studying them word for word. Annual reports are written in accounting language, running up to 300 pages, with profit figures placed in plain sight while all risks are hidden in the small print of the notes. Who would actually read those 300 full pages?

Retail investors only skim headlines, and take positive headlines as good news. Institutional investors hire researchers, but the data fed into their models are still just a few numbers, with no way to capture the tone, let alone the implied meaning behind the words.

Self-media outlets are the most restless. Before the company even opens its mouth, they have already fabricated stories ready to sell. After all this commotion, the company is left with only one label, and the content of that label determines its valuation.

Companies themselves have noticed something wrong. More than 80% of listed companies launch the "one picture to understand" project every year, turning annual reports into posters, animations, and short videos, each more fancy than the last.

But fancy as they are, these productions only show the highlights of the company, putting all their efforts on the good-looking parts, while the few lines of risk warnings are nowhere to be found in the graphics.

No matter how fancy the redesign is, it is just self-praise, rephrasing the same old content and saying it again. Only when the message is clearly delivered and understood by the target audience can the first half of the explanation process be completed. The second half is where the real test lies.

The market never stops sending signals.

A 3% drop in stock price today is the market speaking through price; institutional investors do not speak out loud, but write down all their concerns in research meeting minutes; stock forums are the most lively, where all the dissatisfaction of retail investors is vented.

When the company does not explain, the market never stops talking either. It sets prices based on silence, fills in blanks with speculations, and will not stop speaking even after the company starts to give explanations.

What is the first responsibility the regulator defines for investor relations? It is analysis and research.

The regulations are clearly written: count the number and composition of investors, keep tracking opinions and suggestions from investors and the media, and timely feed them back to the board of directors and management. Even the regulator, when drafting the rules, puts "listening" before "speaking".

In recent years, the Q&A sessions on interactive platforms have become increasingly active, companies are replying more frequently, and always thank users for their attention and welcome questions.

Diligent as they are, they just reply to the questions without caring why the questioner asked in the first place; no one checks whether the reply is properly passed on, or whether the recipient takes it seriously. For most companies, this whole feedback chain is broken.

Replying quickly only means the mouth is moving, while truly taking in the feedback means the ears are working. The two are worlds apart.

At this point, the account is easy to calculate.

Do not count how many meetings the investor relations team holds in a year, or how many articles they publish. Those are all "speaking" work, which is only half of the explanation, and also the easiest half.

The hard part is to receive all the feedback from the market, distinguish which are valid signals and which are noises, bring the valid signals back to the company, and present them to the board of directors.

If you cannot get the feedback, explanation is just a monologue, no matter how long you talk it is all in vain. When a company opens its mouth to explain, the real effort always lies in the half of the work that is about listening.

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But can't the boss do the listening himself? Why do we have to maintain a dedicated team, is the money worth spending?

This question makes sense. The boss checks the stock price every day, reads announcements every day, and thinks he has a full grasp of all market movements. But this so-called "full grasp" is the most unreliable thing. To break it down, there are three accounts to calculate.

The first account: the boss's ears only hear what they want to hear.

The boss's eyes are fixed on the rise and fall of their own company's stock price, while the market is talking about the boom and bust of the entire industry.

When their own stock rises, the boss feels happy, thinking the company is performing well, while the actual reason may just be the whole sector is driven up by the market trend, having nothing to do with the company's actual performance.

The same is true when their stock falls: they always blame the broader market first, never themselves. The stock price is the final conclusion after the market has finished expressing all its opinions. The boss only sees the last line, and never looks into all the reasons behind it.

Even if the boss keeps track of the industry situation, there is a deeper layer: people are naturally inclined to only listen to opinions that are consistent with their own judgments. If the boss thinks the company is doing well, any feedback from the market pointing out problems will be automatically filtered out, and he will still think the company is fine after hearing it.

The attitude is not wrong, the problem lies in the inherent bias of perception. The boss's ears are set to guard his existing judgments, and by the time he truly hears the warning, the signal has already turned into a sharp stock price drop.

This scenario already happened to Oriental Yuhong.

In the autumn of 2023, the board secretary of the leading waterproof materials company posted a long article on her WeChat Moments, asking more than a dozen questions that showed her confusion: the company's revenue and profit both increased, the fundamentals bottomed out and rebounded, retail proportion reached 30%, yet the stock price was still stuck at a low level, is the market blind?

The board secretary felt aggrieved, the company had said everything it could say, why no one listened?

The market was not blind. What the market perceived was completely different from what the company was talking about. While the board secretary was talking about the transformation achievements, the market was focusing on another set of figures: over ten billion accounts receivable, and the old debts tied to the real estate chain.

Both sides were telling the truth, but unfortunately the company only took in its own words.

The subsequent results are shown in the financial statements. In 2024, the revenue dropped by 14.52%, net profit fell by 95.24%, the stock price dropped from more than 20 yuan at the time she posted the question to less than 8 yuan within a year, and the market value evaporated by about 80% from its high point.

The world she could not understand later wrote out the answer word by word.

Therefore, when the boss listens on his own, what he gets back are all echoes, which are his own thoughts bouncing back. Only the original voice is what the market is truly saying.

Spending money on this team is to buy a pair of ears that can receive the original voice, and present the original feedback to the table without distortion. Whether the management takes it in or not is the next step, but the premise is that someone must first receive the feedback.

The second account: if you do not listen to the market, the direct cost is money.

Some people have already tested this. Securities Times reviewed more than 300 companies that terminated refinancing in recent years, and found that more than half, nearly 60% of them, had their stock prices break net value or drop by more than 10% in the corresponding period.

When the stock price stays at a low level, private placement cannot be carried out, and institutional investors will not recognize your financing plan.

Shenzhen Zhongjin Lingnan Nonfemet Co., Ltd. is a ready example. In May this year, its private placement extension proposal was directly voted down by minority shareholders.

The private placement price was 3.72 yuan, while the market price at that time was 7.95 yuan, with a discount of more than half. If you do not communicate thoroughly with the market in normal times, the market will show no mercy when you need to raise money.

Market value is the company's wallet, this statement is no exaggeration. By the time you remember to set up the "listening" mechanism, the door of financing has already been closed, and the market has already made its decision by voting with feet.

The third account: you hold the meeting, but do not arrange the right people; you install the "ears", but do not connect the signal line.

Some people may say: our company attaches great importance to this, we hold performance briefings every year. This is true, more than 90% of companies do this, and it is normal for the chairman and general manager to attend in person.

But another set of data is rarely mentioned: there are still more than 100 listed companies on A-share market that do not even have a full-time board secretary. They hold the performance briefing once a year, the chairman finishes his speech and leaves, no one is in charge of collecting questions before the meeting, no one tracks the implementation after the meeting.

This meeting becomes a one-off ritual, the people on the stage speak to the camera, and no one receives the feedback from the market from beginning to end.

After listing the three accounts, it is clear whether the investment is worth it. The annual cost of the investor relations team, when compared with the loss caused by a failed private placement, or the loss from the stock price staying low for a whole year and the financing channel being cut off for two to three years, which one is more expensive?

Spending a small amount of money to improve listening capability, or saving a small amount of money and losing the financing opportunity, everyone can figure out which is the better deal.

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You have bought the "ears", but the act of listening is invisible and intangible. How do you know the team is actually working? Who judges whether the feedback they get is right or wrong?

This is the hard part. The work of "speaking" can be quantified: number of meetings, number of documents, reply rate, all are figures that can be written into weekly reports. But what about listening? How much feedback has been taken in, how much has been recognized, what adjustments have been made, none of these can be written into a weekly report.

Content that cannot be written into weekly reports cannot be assessed. Without assessment, the team will naturally focus on the quantifiable "speaking" work, overfulfilling all the speaking targets, while not touching any part of the listening work.

The root cause that many companies' investor relations teams become nothing but loudspeakers is exactly this: if you assess the mouth, the team will grow a mouth; if you assess the ears, the team will grow ears.

So how to assess the listening work? China Merchants Bank set a good example this year.

At the shareholders' meeting in June this year, the atmosphere was very tense. As soon as the shareholders spoke, they questioned: is China Merchants Bank's stock undervalued? What on earth is the market value management team doing?

Vice President Peng Jiawen took the feedback directly, admitting that everyone present is dissatisfied with the current stock price of China Merchants Bank, and he agrees with this point.

China Merchants Bank was indeed in a difficult situation at that time. Its stock price dropped by more than 10% within the year, the price-to-book ratio was only 0.81%. A bank that makes 150 billion yuan of profit a year with 13% return on net assets was priced at such a low level, the shareholders came to the meeting full of anger.

Peng Jiawen said at this meeting that the market value management team has been established, and he serves as the team leader. The team holds regular meetings, what do they do at the meetings?

Collect all feedback from the capital market and all opinions from shareholders one by one, present them to the business decision-making level, incorporate the reasonable suggestions into business strategies, and integrate the relevant demands into the dividend plan.

Holding meetings alone is not enough, the results matter.

The team was established this year, but China Merchants Bank started its dividend adjustment very early. The market has long been complaining that the dividend ratio of bank stocks is too low, China Merchants Bank wrote the rule that the dividend ratio will not be lower than 30% into its articles of association, and raised the ratio gradually in recent years to around 35%, with the actual dividend ratio reaching 35.34% in the 2025 fiscal year.

For more than 20 years since its listing, the accumulated dividend has exceeded 450 billion yuan, and the dividend-to-financing ratio is over 4.5 times.

Some people may say: China Merchants Bank is a bank, the regulator is supervising its dividend, it dares not not pay dividends. This statement is only half right.

It is true that the regulator has guiding policies, but banks have another constraint: capital adequacy ratio. Higher dividend will tighten the capital, and the regulator will not cover the loss for them. Being able to raise the dividend ratio while meeting the two constraints all comes from the effort of truly taking in the market's feedback, not from fear of any supervision.

Banks have achieved this even with strict constraints, other companies do not have such tight restrictions, and there is no excuse for not doing it.

The whole process of raising the ratio from 30% to 35% is fully visible. Dividend is real money, no one needs to ask whether they are listening or not, the records tell everything clearly.

Speaking reasonably, after reading this far, some people will definitely mention Warren Buffett: Berkshire does not even have an investor relations team, but it is still doing well, isn't it?

This statement is half correct.

Buffett indeed does not do these things. Berkshire has no investor relations team, he does not release performance guidance, and he even publicly criticized that performance guidance forces companies to do stupid things.

But he does not need extra "ears", because the decades-long track record of delivering promises is there, the market has already explained for him on its own; the annual letter he writes to shareholders is arguably the most expensive explanation course in the whole market. When you have accumulated that level of credibility, you can naturally save the cost of the "ears".

The problem is most companies do not have that level of credibility stock. Learning from Buffett to skip the listening mechanism is no different from running naked in the market.

Whether the credibility is enough is not decided by the boss, but by the market. You can tell it clearly by checking whether the stock price performance and financing process are smooth. Before you have accumulated enough credibility, you have to keep the "ears" on, listen to the feedback steadily, and deliver the promises bit by bit, until you are qualified to remove the "ears".

Therefore, going back to the initial question, how to assess the listening work is not complicated: just check to what level the market's feedback has been implemented.

After receiving the market's feedback, first distinguish which are pricing signals and which are emotional noises, then check the follow-up actions: how many real valid signals has the investor relations team turned into actual company actions this year.

The shallowest level of implementation is being recorded in the board meeting minutes, which means the feedback has at least been heard. The deeper level is being incorporated into the business strategy, and the company has allocated real resources to respond.

The deepest level is using real money to carry out dividend distribution or share repurchase. Money never lies, only when you actually spend the money can you prove you truly take the feedback seriously. The deeper the level, the harder it is to fake. Staying at the minutes level may just be a polite gesture, but taking the action of spending money is the real