University of Southern California Dissertations and Theses

A study and comparison of the IPO communications environments and communications strategies in the U.S. and Hong Kong

(USC Thesis Other)

A study and comparison of the IPO communications environments and communications strategies in the U.S. and Hong Kong

PDF

Download a page range

Download transcript

Copy asset link

Request this asset

Transcript (if available)

Content A STUDY AND COMPARISON OF THE IPO COMMUNICATIONS
ENVIRONMENTS AND COMMUNICATIONS STRATEGIES IN THE U.S. AND
HONG KONG

by
Shu-Fen Tai

A Thesis Presented to the
FACULTY OF THE GRADUATE SCHOOL
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
MASTER OF ARTS
(STRATEGIC PUBLIC RELATIONS)

May 2007

Copyright 2007 Shu-Fen Tai

ii
Acknowledgments

I would like to thank my committee members, Jerry Swerling, Baizhu Chen
and Shannon Campbell, for their guidance and instruction in making this thesis
possible. I would like to dedicate this thesis to my beloved parents, sisters and
brother, and to my friends. Without their continuous support and caring, I would not
have made it through this arduous process. I also owe a debt of gratitude to Cynthia
Ng, who shared time with me to discuss her invaluable IPO communications
experiences in Hong Kong.

iii
Table of Contents

Acknowledgments ii
List of Tables v
List of Figures vi
Abstract vii
Chapter 1: Introduction 1
1.1 Global IPO Overview 2
1.2 Global IPO Trends 11
1.3 Hong Kong and U.S. IPO Communications: Why This Comparison? 12

Chapter 2: U.S. IPO Communications 14
2.1 IPO Communications Environments Overview 14
2.1.1 Securities Industry Landscape 14
A. Securities Market Condition for IPO Activities 14
B. Major Stock Exchanges 15
C. The Investment Community 17
2.1.2 Regulatory Landscape 19
A. Regulators 19
B. Major Securities Regulations 19
2.1.3 Media Landscape 28
2.2 IPO Communications Strategies 34
2.2.1 Strategies during the IPO Communications Process 34
2.2.1.1 Before the IPO 34
2.2.1.2 During the IPO (Pre-filing, waiting and quiet period) 47
2.2.1.3 After the IPO 53
2.2.2 Case Study of MasterCard Inc. IPO Communications 55

Chapter 3: Hong Kong IPO Communications 67
3.1 IPO Communications Environments Overview 67
3.1.1 Securities Industry Landscape 67
A. Securities Market Condition for IPO Activities 67
B. Major Stock Exchange 68
C. The Investment Community 70
3.1.2 Regulatory Landscape 75
A. Regulators 76
B. Regulatory Requirements 77
3.1.3 Media Landscape 81
3.2 IPO Communications Strategies 85
3.2.1 Strategy during the IPO Communications Process 85

iv
3.2.1.1 Before the IPO (before the registration documents are 85
formally submitted)
3.2.1.2 During the IPO (after the registration documents are 88
formally submitted)
3.2.1.3 On the Offering Date and After the IPO 94
3.2.2 Case Study of Bank of China Hong Kong IPO 94
Communications

Chapter 4: Comparison, Analysis & Conclusion 120
4.1 Securities Industry Landscape 120
A. Securities Market Condition for IPO 120
B. Major Stock Exchanges 120
C. The Investment Community 122
4.2 Regulatory Landscape 124
A. Regulators 124
B. Major Regulatory Requirements 124
4.3 The Financial Media Landscape 127
4.4 Comparison of IPO Communication Strategies & Case Studies 128
4.5 Conclusion 135

Bibliography 137

v
List of Tables
Table 1: Previous Market Capitalization for Primary Stock Exchanges 2
from 2000 to 2005

Table 2: Total Listed Companies for Primary Stock Exchanges 3
from 2000 to 2005

Table 3: Top Stock Exchanges in Terms of Market Capitalization 4
in 2005 and 2006

Table 4: The Ten Largest Global IPOs 5
Table 5: Top Stock Exchanges in Terms of IPO Volume in 2006 6
Table 6: Top Countries in Terms of Capital Raised in 2006 7
Table 7: Three Major Stock Exchanges’ IPO Activities in the U.S. 15
Table 8: Primary Financial Media Outlets for IPO Communications in the U.S. 29
Table 9: SEHK IPO Activities 69
Table 10: The Hong Kong Investor Community Makeup 71
Table 11: Geographical Distribution of the HK Overseas Investment Community 72
Table 12: Primary Financial Media Outlets for IPO Communications 81
in Hong Kong

Table 13: Comparison of the U.S. and Hong Kong Stock Exchanges 121
Table 14: Comparison of IPO Communications Environments and 133
Strategies in the U.S. and Hong Kong

vi
List of Figures

Figure 1: Previous Market Capitalization for Primary Stock Exchanges 3
from 2000 to 2005

Figure 2: Total Listed Companies for Primary Stock Exchanges 4
from 2000 to 2005

Figure 3: The HK Investor Community Makeup 71

vii
Abstract

As China’s economy develops rapidly, Hong Kong’s securities market has
played an important role in assisting the privatizations of its state-owned Enterprises
(SOEs). Three of the top ten initial public offerings (IPOs) have taken place in Hong
Kong over the past two years. This demonstrates that Hong Kong also has the ability
to list large-scale IPOs. The larger the IPO deal, the more complex it is to implement
in terms of IPO communications. Since Hong Kong is a location for large-scale IPOs,
analysis of the IPO communication landscape in Hong Kong should reveal valuable
information. Since New York has long been the primary financial capital for large-
scale IPO activities, the patterns of IPO communications in this environment are also
worth examining. This thesis compares IPO communications landscapes in Hong
Kong and the U.S., including the respective investment communities, regulations,
media, and communications strategies.

1
Chapter 1: Introduction
An initial public offering (IPO) is “the first sale of stock by a company to the
public… when a company makes the transformation from being privately held to
becoming publicly traded, complete with its own ticker symbol,” (Taulli, 2001, p.14).
Companies need to grow in order to survive, and, whether this growth is
focused on an increase in market share, enlarging the customer base, or investment in
research and development (R&D), money is required as a capital base. The very first
company to formally issue stock was the Dutch East India Company, which in 1602
was funded by Amsterdam merchants to undertake trade in the Far East. Nowadays,
the decision to make a privately-held company public usually involves a range of
very different considerations. But the primary reasons for going public remain the
same: to generate capital to grow the business (in the case of the primary offering);
or to raise money for existing shareholders or provide for the company’s venture
capitalists (in the case of a secondary offering) (Geddes, 2002, p.7).

Over time, IPO activities have grown ever more complex. Carrying out an
IPO now requires the efforts of a variety of different professionals, including:
investment banks (as underwriters); a syndicate of banks and brokers; lawyers or
legal counselors; investor relations (IR) professionals; financial relations
practitioners; and financial printers. Given that the major purpose of going public is
to raise capital for growth, maximization of proceeds should be the top priority for an
IPO. The role of IPO communications and IR / financial relations practitioners in
achieving this goal cannot be overstated. The larger the scale of the IPO, the more

2
important it is to focus on IPO communications. For this reason, this thesis focuses
on IPO communications, and discusses in detail the types of public relations/investor
relations practices that can help companies maximize their proceeds. This analysis
involves studying and comparing the current IPO communications requirements and
procedures in the U.S. and Hong Kong. However, a brief overview of global stock
markets and IPO trends is first presented, setting the groundwork for the later
analysis of IPO communications research.

1.1 Global IPO Overview

In terms of both accumulated market capital (see Table 1 and Figure 1) and
total listed companies (see Table 2 and Figure 2), the New York stock markets have
historically been ahead of those of London and Hong Kong. According to the World
Federation of Exchanges (2006), at the end of 2006 the New York Stock Exchange
(NYSE) remained the largest securities market in the world. The U.S. exchanges
currently outpace other world exchanges by a significant margin, but this gap is
gradually closing as competition between the exchanges becomes more intense.
Table 1: Previous Market Capitalization for Primary Stock Exchanges from 2000 to 2005
(U.S. Dollars in millions)
Source: World Federation of Exchanges, 2006

Exchange 2000 2001 2002 2003 2004 2005
NASDAQ 3,597,085.9 2,739,674.7 1,994,494.0 2,844,192.6 3,532,912.0 3,603,984.9
NYSE 11,534,612.9 11,026,586.5 9,015,270.5 11,328,953.1 12,707,578.3 13,310,591.6
Hong Kong
Exchange
623,397.7 506,072.9 463,054.9 714,597.4 861,462.9 1,054,999.3
London SE 2,612,230.2 2,164,716.2 1,856,194.4 2,460,064.0 2,865,243.2 3,058,182.4

3

Figure 1: Previous Market Capitalization for Primary Stock Exchanges from 2000 to 2005
(U.S. Dollars in millions) Source: World Federation of Exchanges, 2006

Table 2: Total Listed Companies for Primary Stock Exchanges from 2000 to 2005
Source: World Federation of Exchanges, 2006

Exchange 2000 2001 2002 2003 2004 2005
NASDAQ 4,734 4,063 3,649 3,294 3,229 3,164
NYSE 2,468 2,400 2,366 2,308 2,293 2,270
Hong Kong Exchange 790 867 978 1,037 1,096 1,135
London SE 2,374 2,332 2,824 2,692 2,837 3,091

4
Figure 2: Total Listed Companies for Primary Stock Exchanges from 2000 to 2005
Source: World Federation of Exchanges, 2006

In terms of recent capital growth, both the NYSE and the NASDAQ remain
steady, however their growth is no longer as impressive as was previously the case,
given the current climate (see Table 3). While the NYSE’s 2006 market
capitalization activity growth (15.9%) was higher than that of the Tokyo Stock
Exchange (0.9%) and the NASDAQ (7.2%), both the London Stock Exchange (LSE)
(24.1%) and the Hong Kong Exchange (HKEx) (62.6%) had far higher rates of
growth.
Table 3: Top Stock Exchanges in Terms Of Market Capitalization in 2005 and 2006
(U.S. Dollars in billions) Source: World Federation of Exchanges, 2006

Rank Country Exchange 2005 2006
%
Growth
1 U.S. New York Stock Exchange (NYSE) 13,311 15,421 15.9%
2 Japan Tokyo Stock Exchange (TSE) 4,572 4,614 0.9%
3 U.S. NASDAQ Stock Market 3,604 3,865 7.2%
4 UK London Stock Exchange (LSE) 3,058 3,794 24.1%
5 Pan Europe Euronext 2,707 3,708 37.0%
6 China Hong Kong Exchange (HKEx) 1,055 1,715 62.6%
7 Canada Toronto Stock Exchange (TSX) 1,482 1,701 14.7%
8 German
Frankfurt Stock Exchange (Deutsche
Börse)
1,221 1,638 34.1%
9 Spain BME Spanish Exchange 960 1,323 37.8%
10 Switzerland SWX Swiss Exchange 935 1,212 29.6%

5
According to reports in the Wall Street Journal, in 2001, 36% of all IPOs
were carried out in the U.S., but this figure had dropped to 24% by 2005. That is, the
U.S. securities markets lost one-third of their IPO market share during this period.
Among the top 25 largest IPOs in 2005, only one was undertaken in the U.S., with
the remainder taking place in London and Hong Kong. By the end of 2006, three of
the largest IPOs in history had taken place on the Hong Kong Exchange (HKEx):
those of the Industrial and Commercial Bank of China ($22 billion, the largest ever)
and the Bank of China ($11.2 billion), in 2006, and that of the China Construction
Bank ($9.2 billion), in 2005 (see Table 4) (Chan, 2006).

Table 4: The Ten Largest Global IPOs (U.S. Dollars in billions)
Source: Bloomberg/Dealogic

Rank Listing Exchange Company Year Industry
Capital
Raised
1 HKEx & SSE
Industrial and
Commercial Bank of
China (ICBC)
2006 Chinese Bank $22
2 TSE NTT DoCoMo 1998
Japanese Mobile
Phone Operator
$18.4
3
Borsa Italiana S.P. A
(Italy’s stock
exchange)
Ente Nazionale per
l'Energia Elettrica
(ENEL)
1999
Italian Energy
Provider
$17
4 NYSE
Deutsche Telekom
AG
1996
Germany
Telecommunications
$13
5 HKEx Bank of China (BOC) 2006 Chinese Bank $11.2
6 NYSE AT & T 2000
U.S.
Telecommunications
$10.6
7
Australia Stock
Exchange (ASX)
Telstra Corp. 1997
Australia
Telecommunications
$10
8 LSE OAO Rosneft 2006
Russian Energy
Provider
$10
9 HKEx
China Construction
Bank (CCB)
2005 Chinese Bank $9.2
10 NYSE Kraft Foods Inc. 2001 U.S. Food $8.7

6
According to Bradsher and Barboza (2007), the Hong Kong Exchange was
associated with the highest volume of IPOs in 2006, amounting to $41.22 billion,
making it the world’s largest fund raising market (see Table 5). The Hong Kong
Exchange was closely followed by the London Stock Exchange (LSE) with $39.31
billion, and the NYSE and NASDAQ came in third ($29.22 billion) and fourth
($17.47 billion) respectively. At this point, the U.S. markets’ IPO deals were
formally surpassed by those of the Hong Kong Exchange and the London Stock
Exchange.
Table 5: Top Stock Exchanges in Terms of IPO Volume in 2006
(U.S. Dollars in billions)
Source: New York Times/Thomson Financial

Meanwhile, the amount of capital raised on smaller exchanges has also
increased. The capital raised via IPOs on the Moscow Stock Exchange increased
from $135 million in 2005 to $11.7 billion in 2006. The Hong Kong Exchange
(HKEx), Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange, China’s
three largest exchanges, raised funds totaling $53 billion in 2006. This was more
than the U.K. stock exchanges’ $48.3 billion and the U.S. stock exchanges’ $45.8
Rank Country Exchange IPO Volume % Of Total
1 China Hong Kong Exchange (HKEx) $41.22 17%
2 U.K. London Stock Exchange (LSE) $39.31 15%
3 U.S. New York Stock Exchange (NYSE) $29.22 11%
4 U.S. NASDAQ $17.47 -
5 Pan Europe Euronext Amsterdam $12.52 -
6 UK
London Alternative Investment Market
(AIM)
$11.92
-
7 Russia Moscow Stock Exchange (MSE) $11.76 -
8 German
Frankfurt Stock Exchange (Deutsche
Börse)
$9.74
-
9 China Shanghai Stock Exchange (SSE) $9.62 -
10 Japan
Tokyo Stock Exchange (TSE) First
Section
$8.99
-

7
billion (Halperin, 2006) during the same period (see Table 6). The two primary U.S.
exchanges saw their IPO market shares plummet to 17.6% in 2006 from 23.9% in
2005 and 48.5% in 2000. In particular, NASDAQ’s IPO market share decreased
from 16% in 2004 to 10% in 2005 (Ernst & Young, 2006).

Table 6: Top Countries in Terms of Capital Raised In 2006
(U.S. Dollars in billions)
Source: Business Week/Thomson Financial

Rank Country Stock Exchanges Included IPO Value
1 China
Hong Kong Stock Exchange
Shanghai Stock Exchange
Shenzhen Stock Exchange
$53
2 UK
London Stock Exchange
AIM
$48.3
3 US
New York Stock Exchange
NASDAQ
$45.8

Numerous triggers exist for this shift in the global IPO landscape. Examining
fundamental changes in each of the three cities in which the major exchanges are
located may provide insight into the changed landscape.

New York: High transparency and liquidity but high costs
For quite some time, the U.S. stock markets have been considered the deepest,
most liquid and transparent in the world, and viewed as the perfect arena for large-
scale companies (Ernst & Young, 2006). However, many companies now say that
doing business in New York is too forbidding and that listing outside the U.S. can
often save them not only time, but also arduous preparations (Timmons, 2006). For
instance, in order to comply with the requirements of the Sarbanes-Oxley Act, which
requires corporate management to formally confirm financial statements by

8
certifying internal controls and financial results to the Securities and Exchange
Commission (SEC) (Cole, 2003, p.47), companies listing in the U.S. have to pay a
markedly higher cost. Although some companies interpret this strict regulation as a
branding opportunity and internal control achievement, arguing that the cost will
eventually pay off, most companies still regard the payment as a burden on their
business operations. In addition to the “notorious” Sarbanes-Oxley Act, “the Patriot
Act, the U.S. Department of Homeland Security and the perception that America
does not welcome outsiders” are all problems that have the potential to drive
companies away (Timmons, 2006). Even British nationals find it difficult to enter the
U.S. (Timmons, 2006), let alone people from non-English speaking nations. Many
foreign issuer companies and executives therefore avoid the U.S. due to the SEC’s
authority, the Sarbanes-Oxley Act, disclosure requirements and “the penalties
associated with false disclosure” (Timmons, 2006). To list in the U.S. also costs
issuer companies more. According to a study by the consulting firm Oxera,
investment banks in the U.S. ask for nearly double the underwriting fees for IPOs
compared to similar companies in Europe (Timmons, 2006). All of these factors may
contribute to a stagnant U.S. IPO market.

9
London: International, highly liquid and diverse market but less regulated than the
U.S.
London provides stock markets of a similar profile and liquidity to those in
New York, and the prevailing language is again English. However, compared to the
unfriendly attitudes to outsiders associated with the U.S.,

“London has a more open
visa and work permit policy” (Timmons, 2006). London also enjoys geographic
proximity to the regional IPO demands from Eastern Europe, the Middle East and
Russia. It should also be noted that, historically, these three regions have all
experienced poor relations with the U.S. Moreover, global time zone variations also
provide an advantage for London. Russia and, more generally, Asia, where most of
the world’s rapidly growing companies and markets are located, are in time zones
closer to that of London than of New York, facilitating more efficient business
relationships. In addition, the regulations governing IPO and reporting standards in
London are less strict and hostile than those of New York, making IPOs in London
cheaper and faster for companies (Timmons, 2006). For example, the more flexible
regulations of the London Stock Exchange’s Alternative Investment Market (AIM)
allow companies to accelerate the process of their IPOs by weeks.

Hong Kong: Proximity to China, similar culture and regulations
As of 2006, the trend at the Hong Kong Exchange can be encapsulated as “a
continuation of the China growth story”. The Mainland Chinese government has
striven to reform its corporate governance. As part of the Chinese government’s

10
continuing efforts to privatize its state-owned enterprises (SOEs), it has managed to
take most of its SOEs public on the Hong Kong Exchange and foreign stock
exchanges over the past five years. Because of this massive growth within China and
the five-year IPO plan for SOEs, many global exchanges have courted China’s SOEs
(which are seeking privatization) and private companies (which are seeking
expansion). Considering Hong Kong’s advantages, including geographical proximity,
a similar language, and similar cultural and corporate governance levels and
regulations, the government of Mainland China appears to find listing in the Hong
Kong Exchange most appropriate (Ernst & Young 2006). It is a natural choice for
SOEs’ IPOs, since the Hong Kong Exchange can not only handle such large SOEs,
but also requires that companies subject themselves to Hong Kong’s listing
regulations (these tend to mirror London’s), and demonstrate the SOEs’ governance
credentials. Previously, if large-scale companies sought access to international
capital sources, they were forced to list completely on the U.S. stock exchanges.
Nowadays, however, Hong Kong’s stock market has become deeper and more liquid,
and has effectively broken down the stereotype that only the U.S. securities markets
are capable of listing mega-companies (Ernst & Young 2006), as demonstrated by
several recent huge IPOs by companies from Mainland China. While choosing to list
on the Hong Kong Exchange, Chinese companies can still access global funds from
the U.S. and Europe by issuing American Depositary Receipts (ADRs) (“IPOs Boost
Hong Kong Market”, 2006).

11
1.2 Global IPO Trends

In the past, IPO locations were strongly tied to the locations of the issuer
companies. Large-scale companies might choose to have dual IPOs on the capital
markets in their home countries and on exchanges in London, New York or Tokyo,
depending on their international business needs (Ernst & Young, 2006). Although
companies are inherently biased to listing close to where they are located (Halperin,
2006), the continuing globalization of capital markets means that more and more
issuer companies are selecting to list across national borders by undertaking cross-
border IPOs. According to the Global IPO Trend 2006 analysis undertaken by Ernst
and Young, Hong Kong, Singapore and the U.S. were the primary locations for IPOs
that were willing to cross borders. According to the research, 2004 saw 117 border-
crossing IPOs, but this increased rapidly to 154 in 2005. This development is
intertwined with the fierce competition and rivalry amongst stock exchanges. During
the IPO conferences of the emerging markets, representatives from the stock
exchanges of different countries compete and pitch for new IPO business. For
instance, while Singapore largely pursues the listings of Chinese companies, and
Dubai concentrates on new deals from companies in the Middle East, the
competition between the London Stock Exchange and the New York Stock
Exchange is most fierce in relation to new listings from Russia (Ernst & Young,
2006).
Within this context, mega-IPO deals, such as that of the Industrial and
Commercial Bank of China in 2006, continue to be a growing global IPO

12
phenomenon. Regulators’ efforts to shape the IPO environment are expected to
continue for several years. In addition, four of the top 10, and six of the top 20 IPOs
in 2005 were all from emerging markets. These emerging markets are expected to
remain the driving engines of IPO activities for some time to come (Ernst & Young
2006). Global IPO trends show that industry, consumption products and services,
financial services, and the materials and technology industry, generate the highest
IPO numbers, while energy, power and financial services generate IPOs with the
highest-raised capital (Ernst & Young, 2006).

1.3 Hong Kong and U.S. IPO Communications: Why This Comparison?

For some time Hong Kong has been one of the world’s most active, deep and
liquid securities markets, with impressive efficiency and risk management systems,
but without control over capital movement, capital gains and dividend income tax.
During China’s infrastructure development, Hong Kong’s securities market has
played an important role in assisting the reform of its SOEs and the expansion of
companies. According to the World Federation of Exchanges, while Hong Kong is
presently the second largest stock market in Asia, and only the sixth largest stock
market worldwide, it is nevertheless the exchange where some of the largest global
IPOs tend to take place. During the 1980s and 1990s, large IPOs were only listed in
stock exchanges in the U.S. Since then, the global IPO landscape has changed
dramatically. The fact that three of the ten largest global IPOs in terms of capital

13
raised have taken place in Hong Kong over the past two years demonstrates that
Hong Kong has the ability to list large-scale IPOs.
The larger the IPO deal, the more complex it is to implement in terms of IPO
communications. Since Hong Kong is currently a location for large-scale IPOs,
analysis of the IPO communications landscape in Hong Kong should reveal valuable
information. New York has long been the primary financial capital for large-scale
IPO activities. The experiences of IPO communications in this environment are also
worth examining. This thesis assesses and compares the IPO communications
landscapes of Hong Kong and New York, including the investment communities and
regulations, as well as the media and communications strategies. If IPO
communications techniques are transferable between and applicable across the two
locations, financial PR/IR practitioners working in these two spheres should be able
to learn a great deal from each other.

14
Chapter 2: U.S. IPO Communications

2.1 IPO Communications Environments Overview

2.1.1 Securities Industry Landscape

A. Securities Market Condition for IPO Activities

Since investors are generally more inclined to invest in IPOs during periods
of healthy economic activity, the demand for IPO subscription and the securities
markets has functioned in close alliance with the global economic condition. As
Draho (2006) states: “Stock market quality and IPO decisions are intimately
intertwined.”
Presently, global economic conditions frequently impact the domestic
condition of several primary securities markets in the world where IPO activities
take place. For example, the 1987 crash in the U.S. securities markets, the 2000
high-tech meltdown, and the 9/11 terrorist attacks, not only slowed down the U.S.
economy, but also affected the rest of the world. Following the economic turnaround,
the Enron bankruptcy in 2001 and the WorldCom bankruptcy and other corporate
scandals in 2002 generated great concern regarding corporate governance. IPO
market conditions in the U.S. seemed to have been reshaped by these events. To
address these issues, on July 30, 2002, U.S. President George W. Bush signed the
Sarbanes-Oxley Act (SOX) into law (White House, 2002). For issuer companies,
SOX requires time-consuming procedures and high expenses relating to internal
control and corporate governance. While SOX does enhance corporate accountability
to some degree, the greater compliance costs imposed on publicly-traded companies

15
by SOX are often a major burden for small businesses. As U.S. IPO growth slows,
relative to competitors elsewhere, some argue that the onerous regulatory landscape
in the U.S., such as the practices imposed by SOX, along with the related extra costs
and onerous compliance requirements for IPOs, has significantly impacted IPO
activities in the U.S. However, despite such impositions, which have been
burdensome for some, the securities market in the U.S. continues to be robust in
terms of access to the capital pool, and the record shows that 2006 was the best year
of the last five in terms of capital raised via IPO activities (Taub, 2006).

B. Major Stock Exchanges

The U.S. has three primary stock exchanges: the American Stock Exchange
(AMEX), the National Association of Securities Dealers (NASDAQ), and the New
York Stock Exchange (NYSE).
Table 7: Three Major Stock Exchanges’ IPO Activities in the U.S.
(U.S. Dollars in billions)
Source: World Federation of Exchanges

Stock
Exchange
Market Capital of
New Listings in 2005
Newly Listed Companies Total Listed in 2005
AMEX $6,597 billion
97
(63 domestic, 34 overseas)
595
(495 domestic, 110 overseas)
NASDAQ $39,490 billion
139
(117 domestic, 22
overseas)
3164
(2832 domestic, 332 overseas)
NYSE $135,719 billion
146
(127 domestic, 19
overseas)
2270
(1818 domestic, 452 overseas)

IPO activities on AMEX are less impressive than those on NYSE and
NASDAQ. AMEX fell significantly behind NYSE and NASDAQ in terms of the
IPO market capital, newly listed companies and total listed companies in 2005 (see

16
Table 7). Since NYSE and NASDAQ are the primary stages for IPOs, further
discussion about the environments for IPOs within the two exchanges is worthwhile.
According to statistics from the World Federation of Exchanges, in 2005
NYSE raised the largest amounts of funds and listed the most issuer companies of
the three U.S. stock markets. The New York Stock Exchange (NYSE) is an auction
market with a physical trading floor. NYSE’s listing requirements are among the
most demanding in the world. Most issuer companies capable of listing on NYSE are
large-cap or even mega-cap companies. By complying with NYSE’s high standards,
issuer companies can list with global leaders from different industries and can
differentiate themselves from other competitors. Moreover, many foreign issuer
companies that have business operations in the U.S. also choose to list on NYSE,
because doing so gives them greater access to U.S. financial resources.
In contrast, while people may be familiar with its symbolic physical sites,
like MarketSite Tower, and its broadcast studio in Times Square, NASDAQ is an
over-the-counter (OTC) market which, unlike NYSE, has no physical trading floor.
It instead relies on an intricate communication infrastructure built around an
extensive computer network. As NASDAQ’s listing requirements are less
demanding than those of NYSE, the former has become the capital center for newly
emergent, small-cap, technology or biotechnology companies. According to Shawn
Wang, the CEO of Baidu.com, the largest Internet search engine company in China,
NASDAQ was his first choice of where to list, because he believes that no stock
exchange understands the technology business better than NASDAQ, which can

17
bring international branding opportunities and a savvy investment community to a
company like Baidu.com (Ernst & Young, 2006). However, in contrast to NYSE,
IPO activities on NASDAQ decreased from 16% (170) in 2004 to 10% (139) in 2005.
As a consequence, NASDAQ has focused more on attracting foreign issue
companies from emerging regions like Israel and China. So far, NASDAQ has
attracted foreign listings from China, South Korea, Taiwan and Europe (Ernst &
Young, 2006).

C. The Investment Community

In the late 1990s, technology IPOs nearly dominated the entire securities
market, and were regarded by the investment community as the “Next Big Thing”.
As the “fast cash” myth turned out to be a temporary bubble, the attitude of the
investment community became more conservative. The series of corporate scandals
in the early 2000s exacerbated this general instability. The investment community
became far more alert to proverbial “rotten apples” in the barrel, and to the potential
risk of new IPOs, creating far greater concern about issuer companies’ internal
controls and governance, as well as to the credibility of their management. In an
article entitled Credibility Gap, Heather Harper, Edelman’s senior VP of Corporate
Governance Advisors, describes that more and more investment communities are
paying ever greater attention to intangible assets like management credibility and
integrity when evaluating corporate values (Schultz, 2003). Moreover, a study of
professional investors conducted by the Ernst & Young Center for Business

18
Innovation shows that up to 35% of professional investors’ decisions “were based on
nonfinancial performance measures” (Schultz, 2003).
Internal corporate issues not only influence specific decisions within the
investment community, but also affect what can be best described as its investment
inclinations. According to a U.S.-based investors Personal Finance Poll (Wall Street
Journal Online and Harris Interactive, 2006), about 36% of investors say that “poor
corporate governance had led them to reduce or divest holdings in a company”. The
Wall Street Journal survey also revealed that about 49% of U.S. investors say that
they “trust companies to provide complete and accurate financial information upon
which they can make an investment decision”. While 57% of U.S. investors say that
they “invest in long-term financial service investment products”, only 20% invest in
individual company stocks. This suggests that, as investors pursue more stability and
longer-term investment objectives, investing directly in newly-issued stocks seems
too risky for them.
As for IPO investors, according to Ernst & Young (2006) U.S. investors
currently lack patience for companies that can’t meet their expectations. The report
also indicates that more U.S. investors seek companies with good management teams
and good growth profiles. They therefore look especially for investment
opportunities in emerging markets such as BRIC (Brazil, Russia, India, China), and
in high-growth industries, including financial services, energy, and the
telecommunications industry. As a consequence, NYSE and NASDAQ have in
recent years shifted their efforts to focus more on attracting foreign issuer companies

19
from emerging countries to list on their exchanges to satisfy the investment
community’s needs.
In summary, as investment environments have changed, issuer companies
have had to work harder to attract investors’ attention and meet their investment
demands, while emphasizing transparent communications and credible management.
There is a greater need for issuer companies to give the investment community more
confidence by communicating clearly their businesses goals and objectives, their
management practices, and why they qualify as worthwhile investments.

2.1.2 Regulatory Landscape

A. Regulators

In the U.S., the Securities and Exchange Commission (SEC), which was
created under Section 4 of the Securities Exchange Act of 1934, is the single
regulator for IPO activities (Schaumann, 2002). Before listing on any stock exchange,
an issuer company must register its IPO and file all required documents with the
SEC. Until these documents are approved by the SEC, an issuer company cannot sell
their stock.

B. Major Securities Regulations

Most marketing and publicity of IPOs is regulated primarily by the Securities
Act of 1933 (SA Act, or 1933 Act), which was enacted as a consequence of the 1929
Wall Street stock market crash. Prior to 1929, companies going public were not
required to disclose any material financial facts to help investors make informed

20
decisions regarding the purchase of the securities on offer. Under the 1933 Act, each
issuer company must register and file relevant documents, including mandatory
“registration statements”, with the SEC prior to issuing its securities. The required
registration documentation has two parts: Part I is the “prospectus”, and Part II is the
“registration statement” itself (Schaumann, 2002). The prospectus is the nexus of
the registration documentation, comprising the primary part of the registration
statement, and constitutes the fundamental requirement of the issuance process. The
“registration statement” provides investors with additional information as a
supplement to the prospectus.
As of today, the 1933 Act still shapes most of the regulatory framework for
IPO activities in the U.S. The primary publicity or marketing rules are contained
under Section 5 of the 1933 Act. Once the issuer company submits its registration
documents to the SEC, the filing process begins. Within Section 5, the filing process
is further divided into three primary periods: the pre-filing period (pre-registration
period), the pre-effective period (waiting period), and the post-effective period (quiet
period). Section 5 imposes different degrees of restriction upon issuer companies
during these three periods, which are further detailed as follows:

Pre-filing Period / Pre-registration Period
The pre-filing period, also known as the pre-registration period, refers to the
period before an issuer company has filed registration statements with the SEC.

21
During this period, an issuer company is required not to identify the
underwriters that will be involved, nor the kinds of assets and liabilities it possesses,
via promotional press releases. The SEC regards such press releases as constituting
soliciting tools for “advance interest in participating in the underwriting and advance
purchase orders for the securities to be underwritten” (Schaumann, 2002). In order to
help ensure that issuer companies understand what kinds of messages in their press
releases or other communications may be regarded as promotional information, the
SEC provides an objective but exhaustive “checklist” for drafting press releases
(under Rule 135). A mandatory statement also requires an issuer company to at the
same time mention the legend: “the offer will be made only by means of a
prospectus” (Schaumann, 2002). That is, if messages are not included in Rule 135 by
the SEC, they are considered to comprise promotional information and are thus
completely banned. If messages are confined to what appears under Rule 135, the
information conveyed is not considered to be promotional, and its communication,
such as the security’s title and when the offer is to be made, is allowed. In addition,
while the disclosure of a company’s vision, predictions, projection and forecasts, and
other “soft information” of this sort, has been encouraged by the SEC, the company
is prohibited from making forward-looking information public during the pre-filing
period (Schaumann, 2002).
Despite the application of these restrictions during the pre-filing period,
issuer companies are not rendered silent. It is not the intention of the SEC to prevent
issuer companies from undertaking their normal business operations. Thus, issuer

22
companies can continue advertising their products and communicating with their
stakeholders. In short, they can continue with their normal business activities.
Moreover, if issuer companies have “a history of regular or periodic meetings with
securities and financial analysts” (Schaumann, 2002), these are permitted to continue
on the proviso that the contents of any communications are not related to the
upcoming offering. If issuer companies seek more latitude for their business
communications, and launch an investment community and media outreach shortly
before filing, this is regarded by the SEC as “irregular” business communication,
without “history”. Such communication practices without history violate the
restrictions.

Pre-effective Period / Waiting Period

The pre-effective period, also known as the “waiting period”, begins after an
issuer company has filed its registration statements with the SEC, and ends when the
SEC declares the registration to be effective (Schaumann, 2002).
In addition to continuing with its normal business practices and
communications during the waiting period, an issuer company is also allowed to
prepare brief announcements or advertisements, such as “tombstone ads”

and
“identifying statements” (a little longer than tombstone ads), to

make the investment
community aware of the coming stock offer (Schaumann, 2002). These
announcements and/or advertisements are typically published in financial
newspapers. When tombstone ads are distributed together with a preliminary or
summary prospectus, the communication can be used to actually solicit offers

23
(Schaumann, 2002). However, it should be noted that tombstone ads are always
presented with a legend worded as follows: “No offer to purchase can be actually
accepted during the waiting period and this ad itself does not constitute a solicitation
of an indication of interest from a prospective purchaser” (Schaumann, 2002).

Post-effective Period / Quiet Period

The post-effective period, also known as the “quiet period”, starts
immediately after the SEC declares that the issuer company’s registration statements
are in effect. At the beginning of the post-effective period the issuer company can
begin to sell its stock, but should not communicate beyond its filed prospectus.
Despite the way the quiet period is parameterized, in practice the
communication restrictions under the quiet period rules usually begin in advance of a
company’s IPO filing, and continue for 25 days following the IPO listing. The quiet
period rules, also known as the “gun jumping” provisions, are intended to “prevent
an issuer from conditioning the market by arousing investor interest before a
registration statement covering the securities proposed to be offered had been filed”
(U.S. Securities and Exchange Commission, 1978). While issuer companies can
continue their normal business communications with analysts and shareholders, they
cannot conduct other publicity or communications concerning their offerings that
could be seen as “conditioning the market” for the IPO. Companies suspected by the
SEC of conditioning the market, and accordingly violating the gun jumping rules,
face sanctions imposed by the SEC, a delay in the declaration of effectiveness of
their registration statements, or a delay of their scheduled offering. Such a

24
postponement is called a “cooling off” period, and last up to eight weeks from the
initial offering date. Needless to say, such a delay is inherently inconsistent with the
needs of issuers for timely access to capital.

Enforcement

The most recent and perhaps most famous enforcements of the quiet period
rules by the SEC involved Salesforce.com and Google.
In May 2004, the IPO of Salesforce.com, a vendor of customer relationship
management software, suffered an enforced delay by the SEC because its CEO,
Marc Benioff, gave an interview to The New York Times during the quiet period. The
newspaper published an article entitled “It’s Not Google. It’s That Other Big IPO”
which primarily “covered Benioff’s background, the birth of his company and his
charitable work” (Kawamoto, 2004). The SEC acted because the article had been
published just two weeks before the company’s scheduled IPO, and because it had
appeared in such a formidable and large-circulation media outlet. As previously
discussed, only regular business communications with historical precedent are
permitted during the IPO process. Salesforce.com had no record to that point of
media interviews. Such an abnormal communication could only be regarded by the
SEC as “hyping”. Richard Anderson, a senior vice president in Fleishman-Hillard’s
corporate and business communications group, commented on this incident in PR
Week as follows: “If he had done it once or twice a week for the past six months, it
might have been construed as a normal course of business” (O’Brien, 2004).
Another commentator noted that: “…the delay recalls another SEC-imposed cooling-

25
off period on a dot-com IPO. In 1999, the SEC delayed Webvan’s offering for a
month after allegations that Webvan executives told analysts information not
included in its prospectus” (Kawamoto, 2004).
In another relevant case, Google CEOs Larry Page and Sergey Brin granted
Playboy magazine an interview in March 2004, just a week before they filed their
IPO registration. In order to maximize its publicity value, Playboy published the
interview in its September issue, just a few days before Google’s scheduled IPO on
August 18. This incident immediately drew the SEC’s attention, but elicited different
opinions concerning whether Google should be forced to delay its IPO. In the end,
the company’s IPO was postponed one day beyond its original schedule and took
place on August 19, 2004.
In order not to violate these rules and regulations, the management
representatives of issuer companies usually avoid being interviewed by the media.
To avoid being involved in any possible accusations of hyping, such individuals
typically choose to adopt silence long before they file registration statements, and
often maintain silence for months after their offerings (Thomson Financial, 2006).
Nevertheless, the SEC recognizes that quiet period rules can overly restrict issuer
companies’ communications to a certain degree. Hence, the SEC modified the quiet
period rules under the 1933 Act and mandated new rules in 2005.

26
The Securities Offering Reform of 2005
As communications technology undergoes significant and rapid advances,
information distribution becomes correspondingly faster and more convenient. The
traditional means of distributing IPO information, as described by the 1933 Act, are
now outdated, and there is a growing need to modernize IPO communications
restrictions. The conceptual Report of the Task Force on Disclosure Simplification,
in 1996, and the 1998 Proposal of Relaxation (U.S. Securities and Exchange
Commission, 2005), have signaled that the SEC has begun to consider updating
regulations to address communications regarding registered securities offerings,
delivery of information to investors, and restrictions in place during the registration
process.
As part of its continuing effort to eliminate unnecessary and outmoded
restrictions on offerings, and to provide more timely investment information to
investors without mandating further delays in the offering process, in July 2005 the
SEC released a modified set of regulations governing communications restrictions
during an IPO (these regulations became effective on December 1, 2005) (U.S.
Securities and Exchange Commission, 2005).
Large or mature issuer companies that have a reporting history with the SEC,
and are defined by the SEC as “well-known seasoned issuers”, should benefit most
from the modified rules. They are no longer limited to the quiet period rules and
forced to stick to their IPO prospectuses. Now, in addition to issuing prospectuses,
they can engage in any written or oral communications prior to their offering dates (a

27
significant change from the previous rules). This change was carried out to recognize
that large or mature issuers that have a reporting record under Section 13(a) or
Section 15(d) of the 1933 Act (U.S. Securities and Exchange Commission, 2005),
and a broad following of their 1933 Act filings, are presumed to be reliable and to
have been extensively scrutinized by sophisticated institutional and retail investors,
members of the financial press, and numerous analysts who regularly search for new
information and actively evaluate disclosure when that information is available.
Less-seasoned issuer companies, including unseasoned issuers and non-
reporting issuers, which might have no history of reporting factual business and
forward-looking information, can under this new rule publicize forward-looking
information at any time, even if they have no prior history of filings.
All issuer companies are now also allowed 30 days of latitude prior to filing
IPOs, during which they can communicate any kind of information, with the
exception of mentioning their offerings (U.S. Securities and Exchange Commission,
2005). The “free writing” prospectus is another type of permissible communication.
If media organizations prepare publications without being paid by issuer companies
to disseminate their information, the SEC regards them as “free writing”
prospectuses (U.S. Securities and Exchange Commission, 2005).
Today, target audiences for “roadshows” are typically institutional or
professional investors, and such roadshows traditionally take place in person or as
small group meetings. Under the new rules, all issuer companies can now convert
their information, interviews, roadshow presentations and scripts into electronic

28
formats (such as CD-ROM, electronic roadshows, electronic postings on websites) or
conduct or retransmit their roadshows via the Internet, videos, emails, or other
electronic means (U.S. Securities and Exchange Commission, 2005).

2.1.3 Media Landscape

The financial media have become an important means of reaching the
investment community. Moreover, as the financial media have emerged over the past
decades, and have assumed not only the role of financial news provider but also the
role of finance educator, retail investors have also become savvier and more
sophisticated. To make IPO communications effective today, issuer companies must
be fully conversant with financial media outlets in the U.S. and build positive
relationships with them. A typical media outlet does not employ dedicated
journalists who specialize in covering IPO news. Most journalists who cover IPO
stories already cover the issuer companies and their industries. As a result, it is both
possible and advantageous for issuer companies to build relations with a wide array
of journalists who potentially cover these stories.
In the U.S., print- and web-based financial media are the primary channels
that provide information and analysis regarding issuer companies’ offerings (see
Table 8).
According to Top 200 Newspapers by Largest Reported Circulation (Audit
Bureau of Circulations USA, 2006), The Wall Street Journal has the second largest
daily newspaper circulation (2,047,127) in the U.S, following the largest generic
daily newspaper, USA Today (2,549,252). The Wall Street Journal, a daily financial

29

Table 8: Primary Financial Media Outlets for IPO Communications in the U.S.

Name Category Language Specialization
Circulation
/ Viewership
Wall Street Journal
(U.S.A.)
Daily Print English Finance and Business 2,047,125
1

Barron’s Magazine Weekly Print English Finance and Business 300,017
2

Reuters Newswire Web (free) English Finance and Business -

Motley Fool Web (free) English Finance and Business 3,000.000
3
CNNMoney.com Web (free) English Finance and Business 8,200,000
4

Bloomberg (U.S.) Cable Network English Finance and Business -
CNBC (U.S.) Cable Network English Finance and Business -

newspaper founded in 1889 (Wall Street Journal, 2007), has a “Money and
Investing” section, primarily covering news, and analyzing issues and trends
regarding financial markets (including specific IPO activities). Its subscription-only
online version, The Wall Street Journal Online (wsj.com), was launched in 1996 to
meet the Internet trend.
Barron’s is a weekly financial magazine, first published in 1921 (Barron’s,
2007), which is well known for its critiques and evaluations of companies and their
stocks. The weekly Barron’s attempts to cover companies and their stocks with
greater in-depth analysis than the daily Wall Street Journal. Barron’s has a section
entitled “Review and Preview” that details and analyzes current IPO activities.

1
Audit Bureau of Circulations (USA) (2006). Top 200 Newspapers by Largest Reported Circulation
report. Retrieved February 20, 2007, from http://www.accessabc.com/reader/top150.htm
2
Audit Bureau of Circulations (USA) (2006). Top 200 Newspapers by Largest Reported Circulation
report. Retrieved February 20, 2007, from http://www.accessabc.com/reader/top150.htm
3
Motley Fool, The (2007). Advertise: Audience & Usage. Retrieved February 20, 2007, from
http://www.fool.com/media/advertising/advertising01.htm
4
CNNMoney. (2007). Media Kit. Retrieved February 20, 2007, from
http://money.cnn.com/services/mediakit/

30
According to the IPO specialist Tom Taulli, Barron’s “arguably has the best inside
IPO coverage of any publication available on the newsstand” (Taulli, 2001, p.51).
Both the popular and historically significant daily newspaper The Wall Street
Journal, and the weekly magazine Barron’s, are owned by Dow Jones & Company,
a financial news and information publishing conglomerate founded in 1882 (Dow
Jones & Company, 2007). Dow Jones also provides financial news to the cable
network CNBC and other U.S.-based radio stations (Dow Jones & Company, 2007).
Dow Jones & Company, together with the Reuters Group, also owns Factiva, a news
and business information provider. Hence, to some degree Dow Jones dominates the
U.S. financial media, especially concerning IPO activities.
Reuters Newswire, a UK-based financial news provider founded in 1851
(Reuters, 2007), also has an investing section, which allows the investment
community to garner information about IPO research and analysis. The web-based
Reuters is particularly influential because it offers financial news content in multiple
languages, and which is distributed to nearly every primary media outlet around the
world. Reuters also co-controls the financial newswire Factiva, with Dow Jones &
Company.
Motley Fool was started in 1994 to provide financial information on the web
(Motley Fool, 2007), two years before The Wall Street Journal launched its online
version. Unlike The Wall Street Journal Online, Motley Fool is totally free. Motley
Fool is well known for its humorous take on the world of finance, as its name
implies. It provides financial information to investors, especially well-researched

31
articles about companies planning to go public. As the Internet has become an
indispensable part of U.S. investors’ daily life, almost “every news outlet now also
has a corresponding Web site, and these sites have become a valuable resource for
the entire investing community” (Benmsten, 2001).
CNBC and CNNMoney.com are different stories. CNBC U.S. is a business
and financial news cable network founded in 1989 (CNBC, 2007). As technology
stock prices climbed to their peak on the NASDAQ in 2001, CNBC’s viewership
also climbed to its own historical peak. According to Nielsen ratings provided by
CNBC (Learmonth, 2006), CNBC’s viewership reached 330,000 in 2001. After the
tech bubble burst, however, the market downturn caused CNBC’s viewership to
steadily decline, and forced the closure of the other financial cable network in
existence at the time, CNNfn (founded in 1995) (CNNMoney, 2007). CNBC’s
viewership had fallen to 134,000 by the beginning of 2005 (Learmonth, 2006), less
than half of its peak. The financial news website CNNMoney.com remained after the
demise of CNNfn.
A clear cause/effect relationship seems to be at play here: as the economy
slows down, business and financial news venues become less popular. As the
National Investor Relations Institute has commented: “…with viewership down and
mostly non-profitable Web sites draining resources, the financial press needs the
audience (and advisers) to stay afloat. And to do that, they need news, preferably
good news” (Benmsten, 2001). Given that CNBC’s rival, Bloomberg TV, only

32
broadcasts on the E! Entertainment Television channel from 12:00 a.m. to 8:00 a.m.,
CNBC is at the time of writing the primary financial news network in the U.S.
The Bloomberg Media Group, founded in 1981, provides extensive financial
news services, including television and radio broadcasting, magazine and book
publishing, and a website. Though it broadcasts 24 hours a day in seven different
languages (Bloomberg, 2007), Bloomberg Television has been less pervading in the
U.S. due to a lack of available channels. It has consequently attempted to target
institutional investors. In recent years, however, Bloomberg Television has become
available to a wider audience through podcasting and online television, and has
acquired greater influence among retail investors in the U.S. In addition,
Bloomberg’s free website provides comprehensive and up-to-date news and columns
about IPO listings, and “Stock Movers by Index” to track IPO aftermarket
performance.
In addition to these primary financial media outlets, issuer companies can
gain visibility through trade publications specific to their industries (Metzker, 2001).
It is also of note that, according to the National Investor Relations Institute’s (NIRI)
snapshot survey (Metzker, 2001), the financial media are more interested in
interviewing large-cap companies (83 times in 2000) than small-cap companies (16
times in 2000).
The financial media are now also more prudent. Instead of giving kudos to
issuer companies, as was common during the dotcom boom, the media are now
primarily focused on reporting the facts. Since IPO activities are not as appealing

33
now as during the dotcom boom, media outlets are also in general less interested in
reporting IPO stories. However, IPOs still represent special moments for companies,
and to a certain extent IPO stories still remain newsworthy and continue to attract the
interest of the press. In order to comply with quiet period rules, and in order to
maximize their visibility via financial media, issuer companies should do more
research concerning financial journalists who might potentially cover their IPOs, and
build good relationships with them as soon as possible.

34
2.2 IPO Communications Strategies

2.2.1 Strategies during the IPO Communications Process

2.2.1.1 Before the IPO

Because of the enormity of the tasks involved, the process of a company
going public is akin to a marathon race, possibly taking up to three years or more
from start to finish. If a company has intriguing stories to tell in order to solicit both
the investment community’s and the media’s interests, it must start its
communications as early as possible. This allows a company to put its messages in
place and include those messages in the prospectus it files with the SEC. Moreover,
this extra time and preparation can also make it possible for an issuer company to
communicate more during the IPO process. This is because a company is allowed
continue the same levels of business communications it had practiced before the
filing. If an issuer company maintains a routine dialogue with the investment
community and the media, it can continue those communications throughout the
complete IPO process. As the Strategic Communications Group CEO, Marc
Hausman, has stated:
“The key is to start acting like a public company before you formally start the
IPO process… The more you have in place before the IPO process, the more
you can do during the IPO and the greater the chances of success…even though
you may think you have to be ‘quiet’, you can still communicate.”
(Hausman, 2004)

So even during the “quiet period”, smarter companies can still communicate
with their constituencies without breaking the gun-jumping provisions (see
Regulatory Landscape). Another reason to start preparation earlier is to reduce the

35
risk of launching an unsuccessful IPO. Lack of preparation usually results in an
unsuccessful IPO, and most unsuccessful IPOs end up limiting publicly traded
companies’ ability to implement their business operations aftermarket (Ernst &
Young, 2004). Conversely, companies with well-prepared IPOs usually end up
starting fresh as public companies. So, in order to allow enough time to maximize
IPO communications outcomes (i.e. optimize share value and meet corporate
objectives), once companies plan to go public they must start to plan their IPO
communications immediately by taking the following actions:

A. Behave like a public company
To behave like a public company means that an issuer company’s current
operational programs should be up to the standards of other publicly traded
companies. Such standards may relate to accounting practices, internal control
practices, disclosure policy, legal counsel and investor relations (Thomson Financial,
2006, p.2). This is primarily to ensure that an issuer company is able to comply with
the Sarbanes-Oxley Act; such compliance also engenders confidence in the
investment community about corporate governance issues and creates higher demand
for subscription. If an issuer company’s current standards are abnormal, such as
overly aggressive revenue recognition, or excess compensation for management, the
company should try to rectify the abnormalities while it remains privately-owned.
Importantly, such early-on compliance changes can become part of the subsequent
corporate culture.

36
Through early interaction with the investment community via some sell-side
industry conferences (that is, by acting like a public company) in advance of the IPO,
an issuer company can become known to the investment community, and create
incentives to subscribe to its shares through regularly disclosed financial reports. An
issuer company can also identify and reach out to potential investor constituencies,
build awareness of its business, and understand the investors’ needs by acting like a
public company. Moreover, a company’s management can adapt to the investment
community and become acquainted in advance with relevant regulations. Thomson
Financial describes four strategies for acting like a public company before the IPO:
• “Ensure that the investment community is well informed about the
company and is prepared to buy shares when they become available. To
that end, potential investor constituencies have been identified and
communicated with prior to the roadshow.

• Train senior management in how the market operates.

• Give management experience in working with the investment community,
including analysts, brokers, portfolio managers and others, so as to
become familiar with disclosure regulations and investors’ information
needs.

• Have a well-functioning investor relations plan in place by the time the
Registration Statement is filed.”

(Thomson Financial, 2006, p.4)

Since the investment community’s confidence in an issuer company is the
primary factor affecting how offering prices go, building the company’s reputation
and credibility long before the IPO can help sharpen its images and in boost its
offering price. By acting like a public company, an issuer company can regularly file

37
financial reports or disseminate press releases. Demonstrating a traceable corporate
history always helps to increase investors’ confidence.
Most importantly of all, an issuer company does not have to remain
completely silent during the waiting and quiet period. If a company has a regular
(usually more than one-year) history of practicing non-financially focused
communications with the investment community and the media, or they have
scheduled an advertising campaign or other publicity program in advance of the IPO,
its IPO communications will be regarded as part of its normal business operations.
Smart issuer companies that put themselves in the public company mindset years
(rather than months) before they decide to go public, are allowed far greater latitude
in implementing their IPO communications strategies.

B. Tell a compelling corporate story as well as an appealing investment story
Each issuer company should attempt to capitalize on its own unique strengths
and comparative advantages to attract the investment community’s attention. The
investment community is not merely buying an issuer company’s stock, but also
buying into its unique story and contextual frame, such as a strong and profitable
business model, qualified and credible management, strategy execution, innovation.
Thomson Financial indicates it is crucial for issuer companies to have a sound
corporate story and business plan:
“Before taking steps to build market awareness of their business, companies
planning on going public need to ensure they possess many of the qualities
sought by investors, including a sound business model, strong growth prospects
and an ability to compete well. A failure to have these attributes can make for a

38
rough IPO experience. A comprehensive business plan should be developed
that provides a clear road map for the company and can communicate its
strategic vision to potential investors and other stakeholders.”
(Thomson Financial, 2006, p.3)

Positioning the issuer company well, and affirming its professional know-
how in advance of the IPO, is crucial. When an issuer company conducts thorough
research with due diligence, it should also take the opportunity to survey its
comparative strengths in the market, such as high barriers to entry, and unique
products, in order to create an intriguing corporate profile. In order to fully
understand its competitive advantages, it should formulate questions that help it to
differentiate itself from market rivals (or its peer group) by evaluating operating
metrics like market position, sales and inventory level, and its products/services.
Benjamin Mark Cole emphasizes the importance of issuer companies understanding
their niche as follows:
“From an investor relations perspective, the first step in preparing to go
public is to identify a peer group. Which companies will your company be
gauged against by the investing public… Although every management team
believes its company is one-of-a-kind, the market prefers comparisons and
analogies. Analysts, investment bankers, and fund managers seek to compare
your company with other publicly traded companies as a way to determine
valuation.”
(Cole, 2003, p.123)

An issuer company should evaluate its peer group from every possible angle,
and identify those operating metrics that the investment community may use to
gauge it. For different industries, different operating metrics (typically in the range
of 24 to 27) must be considered. Benjamin Mark Cole uses the example of the
hospice industry:

39
“With the hospice client, employee turnover became an important operating
metric to follow because the industry’s level was quite high. Our client’s
level of employee turnover was comparatively low and became a
distinguishing investment characteristic—a selling point to investors.”
(Cole, 2003, p.124)

An issuer company should adopt a narrative frame that gives it an edge
among peer groups and informs its investors about any comparative advantages it
have. Once it meets with the investment community, a company can then emphasize
its merits and particular niches given the current market conditions and growth
potential.
The investment community is also interested in whether an issuer company
has a solid business model. Much of this information is required in the mandatory
prospectus filed with the SEC. Hence, preparing a good business plan in advance,
with carefully deployed messages, can not only save an issuer company a lot of time
and effort towards preparation for later filing of documents, but also provide them
with a good opportunity to communicate with the investment community about their
vision and other forward-looking information. Since the new rules governing IPO
communications became effective in 2005, the SEC has encouraged issuer
companies to use forward-looking information throughout the IPO communications
process. This is a good communications opportunity for small-cap issuer companies.
In addition to creating a corporate story, an issuer company must also prove
to the investment community that it is a worthy investment. By acting like a public
company even while it is still privately-owned, an issuer company can target the
investment community, disclosing its financial reports regularly and then delivering

40
a good investment story. As Thomson Financial’s suggestion for a successful
company debut states:
“Other methods of outreach that may help the company prepare for its market
debut include perception interviews and attendance at sell-side industry. Sell-
side firms can be interviewed to gauge market awareness of the company and
help management better understand what information interests analysts in the
company’s industry …attending brokerage-sponsored industry conferences
can educate the company on how its peers present their investment story and
the kinds of questions they are asked.”
(Thomson Financial, 2006, p.5)

So, an issuer company can attend the institutional investors’ professional
conferences and learn how other issuer companies deliver their images and stories,
then prepare for questions or scenarios it may encounter by mirroring others. By
doing so, an issuer company also has opportunities to meet with or interview
institutional investors and evaluate their awareness and perceptions of issuer
companies. All of this experience contributes to understanding what kinds of
corporate and investment stories will resonate with those institutional investors. A
corporate story or narrative intertwined with its long-term investment merits is
imperative.
For a biotech issuer company, the telling of a corporate story that shows a
clear financial trail is particularly important, since most biotech companies may
spend several years on research and development (R&D). Before their technologies
are applied to profitable medicines, such companies are not quite profitable, and,
accordingly, are not desirable investment objectives. Biotech issuer companies must
endeavor to position themselves as “unrealized-value” companies with great

41
potential for continuous revenue growth. George Wolff assesses the current biotech
market as follows:
“Biotech companies are creating innovative and sophisticated products that
take an extraordinarily long time to develop and test. It’s hardly surprising
that profitability typically takes many years to achieve when product
development can consume 10 years or more…To borrow a concept from
Warren Buffett, this is a form of value investing. The biotech investor is
searching for companies with unrealized value, a quality that is relatively rare
among stocks on the wider markets. The unrealized value in biotech stocks is
not to be found in revenue sources that have somehow escaped the notice of
the financial industry. Instead, the value of biotechnology must be judged in
terms of promising products, intellectual property, corporate excellence, and
scientific innovation.”
(Wolff, 2001, p.27-28)

However, such investment stories to tout investment can’t be spun from
nothing. When Baidu.com, the largest Chinese search engine, listed on the NASDAQ,
its most salient characteristic—its size—was widely promoted. It was presented as
“another Google in China.” This reflected the scope and size of the organization, but
the comparison to Google also resonated with the investment community and media
in the U.S.
An issuer company should also not sugarcoat its investment story in order to
attract higher appraisals and create a false image of corporate strength, financial
performance, and merit that can’t last. In doing so, a company may risk losing
credibility among the investment community, and it might not be possible to recover
from such a loss.

42
C. Establish a well-functioning investor relations (IR) program and launch the
investment community outreach and media outreach
Building human capital is imperative to overseeing and executing a
successful IPO communications plan throughout the whole IPO process. In addition
to having legal counsel with previous IPO experience, an issuer company should
have investor relations professionals with recent IPO experience and knowledge. The
IPO communications landscape is changing constantly; what worked just a few years
ago may not work today. If an issuer company can afford to hire an outside IR firm
to help with branding, that is the best scenario. Organization of an IPO
communications team and establishment of an IR program should occur in the early
stages of the IPO process, partly because of investment bankers’ conflict of interest.
Underwriters tend to set an offering price lower in order to sell shares more easily,
and IR professionals with IPO expertise can help avoid this situation. Thomson
Financial suggests the following for the strategic IR role during the IPO process:
“…it is recommended that companies hire an investor relations professional,
with IPO experience, early in the pre-IPO process to the extent they can
afford to do so. This provides the company with an expert, who is looking out
solely for the company’s interests. Outside attorneys and auditors, on the
other hand, are concerned with protecting their own interests in addition to
that of the company and may feel compelled to charge as many hours as
possible. Meanwhile, underwriters have an incentive to complete the deal
under conditions as favorable to them as possible, such as pricing the IPO
low in order to minimize their selling effort. An IR professional with IPO
knowledge can help guide the appropriate selection, compensation and
behavior of outside experts. An independent consultant with IPO expertise
also can be very helpful in this regard.”
(Thomson Financial, 2006, p.3)

43
Most issuer companies tend not to start their IPO communications until they
have entered the SEC-mandated quiet period, however, which is too late, and during
which time communications are restricted by imposed regulations. An issuer
company is not permitted to start its investor relations outreach efforts at the same
time as its registration filing, unless it has a history of communication with the
investment community and the media years before IPO registration (see Regulatory
Landscape).
After an IR program is established, an aggressive investment community
outreach and media outreach should also be launched. According to IR expert
Benjamin Mark Cole, an issuer company should implement an IPO awareness
campaign targeting the financial media and professional investors approximately a
year before its IPO filing. This time frame is critical. If the lead-time is longer than
one year, neither the media nor the investors will take the company’s presence
seriously in terms of an investing opportunity. However, if the lead-time is less than
a year, the media outreach may be regarded as conditioning the market, or coming
too late to have timely impact because “even the most successful efforts can take
several months to bear results” (Cole, 2006, p.125). The suggested awareness
program includes two parts: giving presentations at investor conferences held by
brokers; and generating financial media coverage before the quiet period. Benjamin
Mark Cole illustrates the awareness program further:
“Brokerages may invite a select number of private companies to present to
institutions attending their conferences. Giving two to three of these types of
presentations can generate awareness and understanding of your company
among the institutions that may later be buyers of your IPO. It is also good

44
practice for your senior management team. …Another strategy to consider is to
establish financial media relations efforts. Coverage of your company in
regional or national business media can generate increased awareness among
professional investors and have positive implication for business
development.”
(Cole, 2006, p.125)

Thomson Financial also suggests ways in which issuer companies can reach
broad-based investors and professional investors. For broad-based investors, the
mass media, such as “press releases, websites, media coverage and advertising”
(Thomson Financial, 2006, p.5) are all good channels through which to distribute
information. Trade shows and industry publications are good alternative channels for
professional investors.

D. Strategic Transactions
To maximize its strategic growth, an issuer company should endeavor to
complete any impending mergers and acquisitions (M&A), partnerships,
restructuring or joint ventures, before the IPO. Thomson Financial also notes the
importance of completing these strategic transactions before the IPO:
“Before the IPO, companies should also map out and consider implementing
strategic transactions, such as acquisitions, alliances and joint ventures,
aimed at accelerating the company’s growth.”
(Thomson Financial, 2006, p.3)

Where issues of ownership or operational standards may differ across
national or regional borders, internal restructuring of an issuer company may be
needed before it goes public. Forming partnerships before an IPO may be essential,

45
especially for biotech companies, which are technology-oriented rather than product-
or service-oriented. A biotech issuer company may possess a technological
breakthrough related to drug research and manufacture, but have insufficient
resources (whether financial, human, or logistical) to push the breakthrough into the
medical manufacturing sector, and may thus have no real earnings to record on paper.
George Wolff offers five indicators for a good biotech investment. One of these
addresses such alliances, because “development partnerships provide revenues and
scientific validation” (Wolff, 2001, p.52). He further adds:
“Because clinical trials are extremely rigorous, an experienced partner can
also lend a great deal of expertise to help the testing and approvals process go
more smoothly… An investor should pay close attention to a biotech
company’s alliances in weighing the pros and cons of any decision to buy
stock. Alliances mean much more to investors than mere assurances of
subsistence revenue streams for money-losing companies. Most important, an
alliance with a major partner is a stamp of credibility. The fact that an
established drug company with its experienced scientific and managerial staff
has examined a biotech venture and found it worthy of receiving millions of
dollars in payments over many years is a strong endorsement of its
potentials.”
(Wolff, 2001, p.63)

A clear partnership between a biotech issuer company and a solid and
renowned pharmaceutical company resonates with the investment community, and
provides a halo of credibility. Investors can offer financial support or resources to the
larger company with confidence, at the same time endorsing the smaller biotech
issuer company.

46
E. Manage Revenue Expectations
If an issuer company’s revenue estimates (whether provided as information to
underwriters or filed with the SEC) surpass an analyst’s predictions before the IPO,
it is reasonable to assume that the investment community will correspondingly
expect the issuer company’s actual revenue after the IPO “to be better than [the]
analysts had predicted.

Such expectations can create tremendous pressure on
management, especially if its own forecasts were optimistic to begin with” (Cole,
2003, p.128). In order to better manage such predictions, and to not disappoint
shareholders later, before an issuer company makes its revenue estimates public in
advance of IPO filing, it should review its own revenue estimates and actual revenue
figures, and compare those figures with those of its peer group. If its estimates are
higher than its actual results, or higher than its peer group’s average (Cole, 2003,
p.127), it may have to adjust its current revenue estimates to better reflect the reality.
It is crucial for an issuer company to present correct revenue estimates: its investors’
perceptions are at stake. The investment community assesses management teams and
their companies according to the credibility of the information they have provided.

F. Prepare Messages for Diverse Audiences
An issuer company should craft different messages to attract different
audiences, such as the investment community and the media. Since many corporate
websites need to address a variety of constituents (Lettieri, 2002, p.12), such as
investors, customers and the press, and since each constituent has its own needs,

47
corporate websites are especially useful in delivering messages tailored to the media
and the investment community. Messages tailored to customers should emphasize
the quality of a company’s products and services. What resonates with the
investment community, however, is an issuer company’s growth and profit, and what
resonates with the media is newsworthy information. Lisa D. Lettieri further explains
the importance of tailoring messages for different audiences:
“For instance, customers want to know about products and services. Bankers
want financial information. Shareholders want historical and current financial
information, SEC filings, stock charts and frequently asked questions, as well
as product and service descriptions in one central location. Employees and
the press require access to all of this information. In addition, investors need
to have a clear idea of the company’s future prospectus, goals, tactics and
recent achievements, so these should be addressed as well.”
(Lettieri, 2002, p.12)

In order not to violate quiet period rules, issuer companies are wise to remove
hyperlinks to analysts’ papers, or to their underwriters, from their corporate websites
during the quiet period, though they should provide a mechanism which allows
people to leave their contact information. After submitting their details, people
should receive ‘thank you’ notices for their inquiries and should be referred to the
companies’ electronic prospectuses (Cole, 2003, p.134).

2.2.1.2 During the IPO (Pre-filing, waiting and quiet period)

During the waiting period, an issuer company can maintain its non-IPO
related or non-financially focused business communications at the same level as
before the start of the IPO process. Smart companies start their “roadshows” during
the waiting period: the contents of an issuer company’s communications do not have

48
to replicate the information contained in its prospectus until the quiet period, at
which point the registration statements and prospectuses become effective. Marc
Hausman recommends this strategy:
“(Waiting period) This is also the time to embark on a ‘roadshow’ to
potential investors and analysts. After the effective date of the S-1 filing,
your business communications are limited to only those things included in
your Red Herring (a preliminary registration statement filed with the SEC) or
draft prospectus. That’s important to know. The limitation on business
communication is meant to avoid any charges of ‘gun-jumping’ by the SEC.”
(Hausman, 2004)

Initiating roadshows before entering the quiet period allows an issuer
company more leeway in delivering its stories to the investment community. The
strategy should follow these two guidelines:

A. Communicate with Outsiders: Disclosure Policies and Procedures (DPPs)
During the quiet period, an issuer company can continue issuing press
releases and talking to the media, whether print or broadcast, without being accused
of hyping or breaking gun-jumping provisions, but it should not communicate
beyond the prospectus filed with the SEC, and its public statements should always be
consistent with its regular business communications. Well-prepared issuer
companies maintain regular business communications in advance of the IPO process,
since this allows them greater leeway for communications during the quiet period.
By the time an issuer company begins to talk to the media, it should have
readied its Disclosure Policies and Procedures (DPPs) (Cole, 2003, p.128), such as a
prepared statement for all staff to use should they receive calls from journalists

49
requesting interviews or comments. All employees must understand that only
authorized executives can give comments to the media, and all inquiries should be
directed to such authorized personnel. An issuer company should communicate with
its employees on an ongoing basis, making sure they understand what they can and
cannot talk about to outsiders once the company goes public. It is crucial to avoid a
situation where unauthorized employees play the role of spokesperson; this can result
in irreparable damage. Management personnel who are authorized to talk to the
media should be familiar with the quiet period rules and receive media training
concerning what they can and cannot say. An issuer company should also put in
place an approval system for reviewing all disclosure materials, including publicity
information, before formal issuance or launch. These principles are explained by IR
expert Benjamin Mark Cole:
“(p.128) Disclosure Policies and Procedures (DPPs) provide the written
framework for all disclosure decisions…the DPP document includes other
information, such as the executives authorized to serve as spokesperson to the
media and investment community…

(p.130) The approval process for the disclosure of all information, material or
not, should also appear in the DPP document. The company should form a
disclosure committee to ensure that the DPPs are regularly reviewed and
amended as appropriate....

(p.134) how to manage the inquiries that will come in beginning on the day
the S-1 is filed. These include inquiries from the media, from individual
investors, brokers, analysts and institutions and possibly even from credit-
rating agencies… The general rule of thumb here is that the media need to be
asked what their deadlines are. Institutions and analysts should have their
calls returned within the same day. Brokers and individual investors should
have their calls returned within twenty-four hours.”
(Cole, 2003, p. 128, p.130, p.134)

50
In case of emergency or crisis, an issuer company should anticipate any
possible events that may happen during the IPO process, and prepare how to respond
to outsiders (especially the media). Such anticipated crisis scenarios and their related
Q&As should also be included in DPP documents, and the documents should be
made available to every internal staff member via the Internet or meetings. As Cole
further adds:
“Generally, guidelines for handling a crisis should be included in the DPP
documents as well. Some companies consider it prudent to attach a crisis
communication program. It is also wise to identify the timeframe that will
constitute the quarterly quiet period once the company is public.”
(Cole, 2003, p.131)

Issuer companies should note the timing of any interviews given to the media,
and estimate when the interviews will be published. For example, Google granted an
interview to Playboy magazine before entering the quiet period, but the interview
was published just several days before the offering date. This inadvertently broke the
quiet period rules.

B. Roadshow presentations
A “roadshow”, also known as a “dog-and-pony” show, is a “presentation
made in meeting with investors across the country to pitch an offering” (Cole, 2003,
p.132). From the communications strategy standpoint, the roadshow presentation is a
good opportunity for a company’s management to reinforce the primary corporate
and investment stories in its prospectus. It must keep in mind, however, that its target
audiences are mainly professional investors (whether underwriters, influential

51
analysts or prospective investors), who are usually not only IPO-investing savvy, but
also very skeptical. Ernst & Young describes the traits of the target audience as
follows:
“This audience tends to be sophisticated and skeptical. They have heard
many a presentation and may be seeing between 5 and 10 similar
presentations that very day. Your challenge is to capture their imagination,
while at the same time keeping up your own excitement and passion about
the company, even though you may be making the same presentation 50
times or more.”
(Blowers, Griffith, & Milan, 1999, p.139-p.140)

Paying special attention to preparing for these savvy audiences is crucial. An
issuer company had better intend to present these particular analysts and the financial
press with something attractive and informative, and be well prepared to respond to
any possible questions that the audiences might have, some of which may be
construed as attacks on the company. It is important to prepare appropriate
responses to questions, particularly hostile ones, since how a company’s
management performs during roadshow presentations may also influence potential
professional investors’ perceptions about the company and their decisions to invest.
Hence, it is necessary to strengthen the positive image of a company’s management.
To this end, an issuer company should conduct speaker training for its senior
management, and encourage rehearsal of presentations. IR expert Benjamin Mark
Cole notes that good roadshow presentations should not be “more than twenty-five
minutes long” (Cole, 2003, p.133). He also recommends that an issuer company
should have “a professional presentation trainer who knows how Wall Street works.

52
Even the most polished presenter learns from such training, given the unique
characteristics and needs of the professional investor audience” (Cole, 2003, p.133).
A script of anticipated questions and answers should be prepared in advance,
and it should be ensured that the management does not deviate from the script. Ernst
& Young also provides several tips for a company’s management in making
roadshows more effective:
• “It is important that you anticipate and practice answering tough
questions. Make sure to rehearse a few times before you make your first
presentation.

• Find out from your investment banker whether each participant is a
generalist or a specialist in your industry or sector. Find out their
investment criteria. This will help you position your story and decide
whether or not you need to explain your industry sector.

• After summarizing your strategy, ask the audience if there are any
questions you have failed to address. Schedule a follow-up visit and ask
how frequently they wish to be in touch.

• Be consistent and enthusiastic. You may have seven meetings a day,
and sometimes you will have trouble remembering what you have
covered. That is why it is best to maintain the same order, approach, and
materials in all your presentations.

• When each meeting is over, get feedback and review it at the end of
each day. What didn’t go well? It is important to keep improving your
presentation.”
(Blowers et al., 1999, p.174)
Under the rules newly modified in 2005, an issuer company can not only post
roadshow presentations on websites, but can also turn the presentations into CD-
ROMs or videotapes, to include in investors’ packages. Traditionally, roadshow
presentations have been intended only for institutional investors and portfolio
managers, however by employing these high-tech communication venues an issuer

53
company can reach potential retail investors who may be interested but unable to
attend roadshows, and can present them with persuasive visual images of its
manufacturing plants, production pipelines, working environments and employees.
Finally, during this period an issuer company should start to plan its aftermarket
communications, so that such plans can be executed as soon as the quiet period is
over. Marc Hausman presents the following plan to initiate communication strategies
after emerging from the quiet period:
“In general, it’s important to learn to balance investors’ short-term and long-
term expectations. But you’ll need to work harder on selling investors on
your long-term strategy and how you are successfully executing your
business plan.”
(Hausman, 2004)

2.2.1.3 After the IPO

After going public, an issuer company formally becomes a publicly traded
company. A new set of disclosure regulations which apply to public companies, such
as Regulation Fair Disclosure, are put into practice. To comply with these new
disclosure standards, a company must make every piece of information regarding its
business and financial practices publicly available. In addition, it must be
accountable to its shareholders’ privileges when making influential decisions, and
must keep its communication strategies consistent with its practices to that point. As
Thomson Financial states:
“Following the IPO event, companies must meet the operational requirements
of being public and fulfill shareholders’ expectations. The communications
strategy that was put in place in the pre-IPO process should continue to build
the company’s reputation and credibility in the investment community.

54
Companies should also seek to update their strategic vision, stay competitive
on financial and non-financial measures and continue to grow.”
(Thomson Financial, 2006, p.8)

Therefore, the after-IPO communications strategies are presented as follows:

A. Balance investors’ expectations and keep updating information and messages
It is very common for a company’s stock price to trade below its offering
price immediately following the offering date. This IPO aftermarket phenomenon is
noted by IR expert Benjamin Mark Cole:
“As of early 2003, the 976 companies that had completed IPO since the
beginning of 1998 (and for which information was available) were trading at
only 54 percent of their offering prices. That constitutes a large sample—
nearly 1,000 companies—and it highlights a fact: Most IPOs are not going to
the moon, either on Wall Street or operationally.”
(Cole, 2003, p.121)

A successful IPO is evaluated not only by the amount of subscription and the
offering price, but also by aftermarket performance. A company needs a consistent
communications strategy to balance investors’ expectations and maintain its
credibility and reputation. In addition to coherent communications, investors love to
receive regular information from companies. If they do not get what they want from
a company, they tend to be very harsh. Consequently, an issuer company should
continue to refine its messages and its strategic vision year after year, to help build a
long-term relationship with its shareholders.

55
B. Evaluate media exposure effects
Adequate positive media exposure after a company emerges from the quiet
period can promote the sale of stock. But an issuer company should think twice
before rushing to conduct media interviews or give comments. If a company can’t
balance its shareholders’ expectations first, and its stock prices are also trading
below IPO prices, interviews may only result in negative media exposure.

2.2.2 Case Study of MasterCard Inc. IPO Communications

2.2.2.1 Introduction
5

On August 31, 2005, MasterCard Inc., the world’s second largest payment-
processing membership network, based in Purchase, NY, announced its plan to go
public. On May 25, 2006, MasterCard Inc. formally went public, priced at $39.00 on
the NYSE under the ticker symbol MA. On June 28, 2006, the original MasterCard
International was formally re-named MasterCard Worldwide, in order to enhance its
corporate image of internationalization, and a new corporate logo and corporate
tagline—“The Heart of Commerce”—were introduced. On February 16, 2007, the
stock was trading at $108.32.

5
MasterCard Worldwide Website (2007). Corporate Overview. Retrieved February 2, 2007, from
http://www.mastercard.com/us/company/en/corporate/index.html

56
2.2.2.2 History: Company Background
6

What became MasterCard Inc. was first founded in 1966 as the Interbank
Card Association (ICA), by a group of banks including the Bank of California,
Crocker National Bank, United California Bank, and Wells Fargo. In 1969, in order
to compete with BankAmericard, which had been issued in 1958 by Bank of
America and which later became the VISA credit card, ICA created “Master Charge”,
which in 1979 was renamed “MasterCard”. After MasterCard International acquired
Europay International, a leading European credit card issuer association, in 2002, it
incorporated as a privately-held stock corporation. Today, MasterCard Inc. has
approximately 25,000 member banks and over 29 million acceptance locations. Its
largest member banks include JPMorgan Chase, Citigroup, Bank of America and
HSBC.
MasterCard Inc. functions as a payment-processing coordinator among
cardholders (consumers), Issuing Banks (consumers’ banks and also MasterCard’s
member banks that issue its cards), merchants, and Acquiring Banks (merchants’
banks). MasterCard derives its profits from the interchange fees, which its member
banks charge to the merchants’ banks. In addition to MasterCard®, MasterCard
Inc.’s family of brands also include Maestro®, Cirrus® and PayPass™ (a contactless
payment card).

6
MasterCard Worldwide Website (2007). The MasterCard Story. Retrieved February 2, 2007, from
http://www.mastercard.com/us/company/en/corporate/the_mastercard_story.html

57
2.2.2.3 Struggles: The Media and Investment Community’s Attitude
Based on analysis of media coverage and analysts’ comments, MasterCard
faced two major concerns before going public: its ongoing antitrust litigations, and
its decreasing credit card market share and low debit card market share.
There are currently four major payment-processing networks: American
Express, Discover, MasterCard and Visa. The two largest, MasterCard and Visa, had
banned their member banks from issuing other credit cards, a process known as
brand exclusion (Fleischer, 2006). In January 1996, Hagens Berman filed a federal
class-action antitrust lawsuit against the two giant issuers to end interchange fees.
Several merchants, including Wal-Mart, and their competitors American Express and
Discover, were among the litigation’s plaintiffs. MasterCard and Visa have paid
approximately $3 billion in settlement so far, and can no longer prevent their
member banks from issuing the cards of competitors, because of the U.S.
Department of Justice ruling in October 2004 (Philippidis, 2006). MasterCard’s
member banks have profited $18 billion from interchange fees; this may reach $45
billion by 2009 (Philippidis, 2006). If federal courts rule that the charges of
monopolizing the payment market and overcharging their member banks are true,
MasterCard and Visa may suffer another billion dollars in losses as member banks
discontinue bearing the MasterCard and Visa brand names on their cards. In its IPO
registration statement, MasterCard also warned investors that Standard & Poor’s
might lower its credit rating. Considering all of these potential risks, many analysts
and media organizations suggested that MasterCard’s IPO was not a “priceless” deal.

58
Furthermore, in 2004, Visa had 53.9 percent of credit card market shares in
the U.S., to MasterCard’s 28.9 percent—barely more than half (Philippidis, 2006).
Visa has grown more than a quarter by taking advantage of the debit card boom. At
the time of MasterCard’s IPO, the investment community was quietly concerned
whether MasterCard could maintain its market share.

2.2.2.4 Response: IPO Communication Strategies
2.2.2.4.1 Before the IPO
7

A. Prepare Early: Act like a Public Company and comply with the Sarbanes-Oxley
Act
In 2002, MasterCard merged with the European credit card network Europay
International. Because Europay International had originally been structured as a
private share organization, MasterCard was required to register and file reports with
the SEC after the merger. Therefore, although it had not yet gone public, MasterCard
had become a privately-held share company, and had begun to comply with the
Sarbanes-Oxley Act (SOX). It has released quarterly financial reports ever since. In
this way, even before MasterCard announced its plan to go public in 2005 it had
already been acting like a publicly-held company for three years by periodically
filing with the SEC. By behaving like a public company in the early stages,
MasterCard had accumulated a certain degree of transparency about its financial

7
Information primarily based on interviews with MasterCard’s investor relations officers by Thomson
Financial (September 2006). IPO Best Practices. Stamford, CT: Thomson Financial. Retrieved
January 12, 2007, from http://www.thomsonfinancial.com/docs/IPObestpractices.pdf

59
performance, and had established high standards for corporate governance and
internal controls.

B. Establish a well-functioned investor relations (IR) program
MasterCard also began to build its investor relations (IR) program before its
IPO. While MasterCard already had a global communications division in charge of
its external communications, it also hired experienced investor relations professional
Barbara Gasper as its Senior VP of Investor Relations to initiate its IR program.
Gasper had previous IR experience with companies including Ford, Lucent and
Raytheon. In addition, MasterCard assigned its internal treasurer, Linda Kirkpatrick,
who had years of company experience, to VP of Investor Relations, to work with
Barbara Gasper on MasterCard’s financial communications. Moreover, the company
obtained external IPO communications help by retaining Financial Dynamics (Nolan,
2005). After creating its IR team, it also set up an IR reporting mechanism,
separating the IR functions from the existing corporate communications sector,
which reported directly to the CEO. MasterCard’s IR officers (IROs) reported
directly to officers reporting to its CFO.

C. Prepare the Management
After setting up its IR functions, MasterCard’s IROs began to prepare its
management for the upcoming offering. MasterCard’s management, including its
CEO Robert Selander and CFO Chris McWilton, were conducting “primary

60
research” of their own. They consulted with other CEOs and CFOs whose companies
had gone public in recent years, learning from their first-hand experiences of
preparing for media relations and investor relations, and learning about the kinds of
problems they might encounter. Selander and McWilton also learned that they
should dedicate more time and resources to communications with the investment
community.

2.2.2.4.2 During the IPO—Tell Its Own Story
8

As part of its investment outreach, one of MasterCard’s primary
communication strategies was to reinforce the company’s strong global customer-
oriented strategy, vivid brand image and revenue growth. MasterCard had a very
compelling corporate and investment story to tell the investment community,
especially since 2006 happened to be its 40
th
anniversary. Moreover, as of the third
quarter of 2005, MasterCard had enjoyed double-digit growth for seven consecutive
quarters—a persuasive incentive for investment. When communicating with the
investment community via its press releases, MasterCard repeatedly highlighted this
sustained growth. When announcing its financial performance, MasterCard attributed
its growth to the following strengths (based on an analysis of ten press releases
issued during the IPO process; the numbers inside the parentheses indicate the total
frequency of appearance):

8
Content analysis of MasterCard press releases from May 10, 2005, to May 24, 2006.

61
A. The continued success of MasterCard’s global customer-focused strategy
(8)

B. Its ability to deliver an expanding portfolio of innovative payment
products, value-added processing payment, franchise and information
services (8)

C. The strengths of MasterCard’s globally competitive business model (7)

D. The vitality of MasterCard’s global brand (4)

E. Continued support of MasterCard member financial institutions around
the world (4)

F. Unsurpassed worldwide merchant acceptance (2)

G. Increased cardholder spending around the world (1)

H. Global payments trend of moving away from paper-based payments to
electronic forms (1)

The terms “double-digit revenue growth”, “business strengths”, “customer”,
“brand”, “innovative products and processing”, and “global”, appear repeatedly in
almost every financial release. Such deliberate repetition strongly suggests that the
image of itself MasterCard wanted to portray to the investment community was that
of a global customer-oriented payment processing brand with double-digit revenue
growth and a great portfolio of products.
In addition, in all its press releases during the IPO process, MasterCard CEO
Robert Selander, CFO Chris McWilton, and COO Alan Heur, not only commented
on MasterCard’s strengths, but also provided forward-looking information. For
example, in one release Selander predicted MasterCard’s growth potential: “We
believe the trend within the global payments industry of moving away from paper-

62
based forms of payment such as cash and checks toward electronic forms of payment
creates opportunities for continued growth in our business.”
9

In response to concerns regarding pending antitrust litigation, MasterCard
downplayed the risk, and said in its prospectus that $650 million of the IPO proceeds
could help fight against litigations. In MasterCard’s preliminary prospectus, filed
with the SEC in December 2005, it also said it would establish a MasterCard
Foundation as part of its corporate philanthropy plan. MasterCard planned to allocate
10 percent of its stocks and 17 percent of its voting shares to this Foundation. In one
of the ten press releases, CEO Robert Selander also articulated two goals for the
MasterCard Foundation
10
:
“…the MasterCard Foundation, which will have two goals—to support
young people around the world in gaining the skills necessary to succeed in a
diverse global work force, and to provide microfinance programs and
services to the financially disadvantaged to enhance local economies and
develop entrepreneurs. This contribution to the societies around the world
where we and our customer financial institutions do business demonstrates a
dedication to charitable giving in a very meaningful way.”

Other than regular financial disclosures and press releases, as part of its
investment outreach MasterCard also initiated 13-day global roadshow presentations,
covering 20 cities in 6 countries. Through the extensive roadshow presentations,

9
MasterCard Worldwide. (November 3, 2005). MasterCard Incorporated Reports Third Quarter
Results. Financial News. Retrieved March 2, 2007 from
http://investorrelations.mastercardintl.com/phoenix.zhtml?c=148835&p=irol-
newsArticle&ID=794630&highlight=
10
MasterCard Worldwide. (November 28, 2005). MasterCard Shareholders Approve Proposals for
New Ownership and Governance Structure. Financial News. Retrieved March 2, 2007 from
http://investorrelations.mastercardintl.com/phoenix.zhtml?c=148835&p=irol-
newsArticle&ID=794626&highlight=

63
MasterCard reached more than 800 potential investors via 17 group meetings and 76
one-on-one meetings (Thomson Financial, 2006).

2.2.2.4.3 After the IPO
11

After its offering, MasterCard continued to release its earnings reports on a
quarterly basis, as required by law. Since the finance department, legal sector, IR
sector and corporate communications teams tended to work individually, MasterCard
strengthened internal communications between these departments. IR officers also
prepared management to communicate efficiently with shareholders and the media in
conference calls and periodical earnings meetings by providing them with briefings
and anticipated Q&A sheets. MasterCard also initiated a new communications plan
after its emergence from the quiet period.

2.2.2.4 Comments
When MasterCard began trading on the NYSE on May 25, 2006, its stock
price quickly soared by 15%, from $39 to $45.32, raising $2.4 billion. The success
of MasterCard’s IPO communications can be attributed to its three primary strategies:
to maintain low-key media relations during the quiet period; to act like a public
company before the offering; and to bring in IR experts and expertise in order to
learn from other issuer companies.

11
Information primarily based on interviews with MasterCard’s investor relations officers by
Thomson Financial (September 2006). IPO Best Practices. Stamford, CT: Thomson Financial.
Retrieved January 12, 2007, from http://www.thomsonfinancial.com/docs/IPObestpractices.pdf

64
Firstly, because of the quiet period rules imposed by the SEC, throughout the
whole IPO process neither MasterCard’s CEO nor its spokespersons gave public
announcements or commented on its offering. Even when directly asked by the
media, they cited quiet period restrictions and refused to comment. When
MasterCard’s roadshow presentations fell behind schedule, and Wall Street analysts
speculated on the reasons for the delay, MasterCard still made no public response.
Even when it was reported that CEO Robert Selander had undergone prostate cancer
surgery in February 2006, and MasterCard was forced to postpone its scheduled
offering, the company still avoided making public announcements to the media other
than in the form of its prospectus. The media learned formally of the surgery only via
amended prospectus filings with the SEC. To severely limit financial media coverage
during the quiet period was just one of MasterCard’s communication strategies. This
strategy was aimed at avoiding violation of the SEC’s quiet period rules.
Secondly, MasterCard had begun to act like a public company, complying
with the Sarbanes-Oxley Act requirements and disclosing its financial reports
regularly since 2002. As a result, while many other issuer companies were forced to
delay their offerings because they couldn’t comply with the SOX requirements in
time, MasterCard did not have this problem: it had acted like a public company and
filed reports with the SEC long before its offerings. U.S. investors nowadays care
deeply about corporate governance and internal control issues. Compliance with the
SOX, and accumulation of a traceable corporate profile and financial record in the
early stages, also demonstrated that MasterCard possessed sufficient ability to deal

65
with the financial performance pressures, and internal control and corporate
governance issues, of a public company. All of this not only enhanced the investment
community’s confidence in the company’s transparency on both financial and non-
financial levels, but also brought about higher demands for subscriptions. Since
MasterCard had regularly disclosed its quarterly financial reports via press releases
since 2002, promotional information revealed in these press releases constituted a
history of normal communications. MasterCard took advantage of the permissible
normal business communications activities to reinforce its messages, and allowed its
CEO, CFO and COO to comment on its financial and non-financial performance,
and even to provide forward-looking information. Without its history of regular
financial disclosures, its management’s promotional comments and forward-looking
information would have been perceived as hyping, and as attempting to condition the
market. But the SEC didn’t censor MasterCard, exemplifying the importance of an
issuer company acting like a public company as early as possible.
Thirdly, MasterCard also made efforts to meet with the investment
community behind the scenes, which efforts could be discerned from a number of
positive, in-depth analyst reports, such as extensive reports from Morningstar and
Bull Market Report. Without this investment community outreach, potential
investors would have been able to learn of MasterCard’s coming offering only via its
prospectus and press releases.

66
Finally, were it not for its IR professionals’ assistance and guidance, the
MasterCard management team might not have learned from other issuer companies’
experiences and adjusted their attitudes.
In summary, the most important lessons that a U.S. issuer company can learn
from MasterCard’s IPO communications experiences are the importance of early
preparation, and the importance of compliance with relevant regulations as early as
possible.

67

Chapter 3: Hong Kong IPO Communications

3.1 IPO Communications Environments Overview

3.1.1 Securities Industry Landscape

A. Securities Market Condition for IPO activities

The globalization of the economic sector has greatly impacted several
primary securities markets around the world and conditioned their IPO activities.
This is especially true for the Hong Kong securities market. In 2005, Hong Kong’s
service sector accounted for 91% of its Gross Domestic Product (GDP). In this
sector, the “wholesale, retail and import and export trades, restaurants and hotels”
businesses are its primary industries, accounting for 28.3% of GDP (Hong Kong
Special Administrative Region (SAR) government, 2006), which is quite prominent
on a global scale. This economic focus has made Hong Kong more vulnerable and
susceptible to changes in the outside environment. With an economy heavily reliant
on services like export trade, Hong Kong’s securities market has experienced several
recessions as global economic conditions have changed.
During the Wall Street crashes in 1987, about 22.6% of U.S. stock value was
wiped out, resulting in the tumble of both European and Asian securities markets
(Chussudovsky, 1997, p.29). Hong Kong’s securities market also crashed, and was
forced to shut down for four days (Securities and Futures Commission, 2006). As a
result of this event, the Hong Kong securities market was forced to undergo several
reforms, including the enactment of the Securities and Futures Commission

68
Ordinance (SFCO) and the establishment of the regulatory Securities and Futures
Commission (SFC). Hong Kong’s airlines, retail sales, exports trade, hotels and
domestic consumption were greatly impacted by the Asian financial crisis which
began in the spring of 1997 and spread throughout the Asia-Pacific region in 1998.
Its economy was near recession, and correspondingly the securities market suffered
greatly. Several reforms were instituted in order to strengthen the securities market,
including the establishment of Hong Kong’s second board, the Growth Enterprise
Market (GEM), and the Hong Kong Exchanges and Clearing Ltd. (HKEx)
(Securities and Futures Commission, 2003). Then, the bursting of the Internet bubble
in 2000, and the 9/11 attack in 2001, both impacted not only Wall Street but also
Hong Kong’s economy and securities market. In 2003, the Severe Acute Respiratory
Syndrome (SARS) epidemic triggered yet another downturn in Hong Kong’s
economy and hurt Hong Kong’s stock market once again.
However, thanks to state-owned enterprises (SOE) from China seeking
privatization opportunities in Hong Kong in recent years, Hong Kong’s economy has
experienced an upturn, and its securities market and IPO activities have gradually
recovered from the SARS epidemic.

B. Major Stock Exchange

For a long time, Hong Kong has had only one stock exchange: the Stock
Exchange of Hong Kong Limited (SEHK). In 2005, SEHK raised $762,107 billion
market capital from 67 new companies’ listings. However, none of those newly
listed companies were from overseas (See Table 9).

69
Table 9: SEHK IPO Activities
(HK Dollars in billions)
Source: World Federation of Exchanges

Stock
Exchange
Market Capital of New
Listings in 2005
Newly Listed Companies Total Listed in 2005
SEHK $762,107 Billions
67
(67 domestic, 0 overseas)
1135
(1126 domestic, 9
overseas)

As part of a series of stock and futures market reforms intended to increase
competitiveness and globalization, on March 6, 2000, following the 1997 Asian
financial crisis, the Hong Kong Special Administrative Region (HKSAR)
government merged SEHK, Hong Kong Futures Exchange Limited (HKFE), and
Hong Kong Securities Clearing Company Limited (HKSCC) into a single holding
company, Hong Kong Exchanges and Clearing Limited (HKEx), which listed its
shares on June 27, 2000 (Hong Kong Exchanges and Clearing Limited, 2004a).
Afterwards, SEHK became a wholly-owned subsidiary of HKEx.
Despite being the only stock exchange in Hong Kong, the Stock Exchange of
Hong Kong Limited (SEHK), under Hong Kong Exchanges and Clearing Limited
(HKEx), has two trading platforms: the Main Board, and the Growth Enterprise
Market (GEM) (Hong Kong Exchanges and Clearing Limited, 2004d). Each of these
has different listing requirements and regulations. The Main Board is designed for
established large-cap or blue-chip companies to raise capital, so its listing
requirements are more demanding. In contrast, GEM was established in November
1999 as a means for younger, small-cap companies to obtain capital. It is akin to
other second boards around the world composed of technology and
telecommunications companies.

70
In general, most IPO activities take place on the Main Board rather than on
GEM. For example, among 67 new companies listed on SEHK in 2005, 57 listed on
the Main Board, and only 10 on GEM (Securities and Futures Commission, 2007).
As China’s economy grows rapidly—and at the Chinese government’s
encouragement—most foreign IPO activities on SEHK involve issuer companies
from Mainland China. Most large Chinese issuers’ IPOs in Hong Kong have
followed a pattern, aimed at maximizing their fund-raising: a public offering on
SEHK, and a simultaneous offering to overseas investors by issuing global
depositary receipts (GDRs). In this model, most funds came from global investors.
For example, of the ten largest IPOs in Hong Kong between 1997 and 2002, 11.2%
of the capital was raised from Hong Kong and 88.8% from international markets
(Lee & Chang, 2003). The Chinese influence on the Hong Kong stock exchange is
increased further as Taiwanese and Japanese issuer companies that have business
operations needs in Mainland China seek to list on the SEHK for strategic purposes.

C. The Investment Community

The stock market in Hong Kong is a balanced field for retail and professional
investors. According to the Cash Market Transaction Survey by HKEx in 2006
(Hong Kong Exchanges and Clearing Limited, 2006a), the investment community in
Hong Kong can be divided into retail investors and institutional investors. Both
categories include HK domestic investors and overseas investors. The survey reveals
that HK domestic investors traded most frequently in 2004/5 (up to 56%), followed
by overseas institutional investors (36%). Among all investors in SEHK, while HK

71
domestic retail investors accounted for 30% of the investment community in 2004/5,
overseas institutional investors were the largest investor group (34%). Overseas retail
investors amounted to only 2%. (See Table 10.)

Table 10: The HK Investor Community Makeup

HK Investor Type %
Domestic retail investors 30%
Domestic institutional investors 27%
Overseas retail investors 2%
Overseas institutional investors 34%
HKEx Self 8%

Figure 3: The HK Investor Community Makeup

72
Among overseas investors, about 29% are primarily from the U.S., followed
by those from the UK (25%) and the rest of Europe (22%). Among Asian countries,
Singapore (8%), Mainland China (5%) and Japan (3%) are the primary contributors.
(See Table 11.)
Table 11: Geographical Distribution of the HK Overseas Investment Community
Source: Cash Market Transaction Survey 2004/5

Country %
U.S. 29%
U.K. 25%
Rest of Europe 22%
Singapore 8%
Mainland China 5%
Japan 3%
Taiwan 1%
Rest of Asia 1%
Others 6%

According to the Retail Investor Survey by HKEx (Hong Kong Exchanges
and Clearing Limited, 2006b), in 2006 about 28.6% of Hong Kong’s adult
population (1,618,000 people) were retail stock investors on HKEx (an increase from
24% in 2004), 23.6% had traded within the previous 12 months, and only 2.4% were
derivatives investors. This suggests that most Hong Kong retail investors are
interested in stocks rather than other commodities like derivatives. The survey also
describes the characteristics of a typical retail stock investor: “[a] 42-year-old white-
collar worker, with upper secondary or above education, a monthly personal income

73
of about HK$18,750 and a monthly household income of about HK$35,000” (Hong
Kong Exchanges and Clearing Limited, 2006b). Most are male investors who like to
trade online.
A 2005 survey about IPO investment experiences, by the Securities and
Futures Commission (SFC), revealed that up to 79.7% of Hong Kong domestic retail
investors had subscribed to IPOs over the previous five years (Securities and Futures
Commission, 2005). Both retail and institutional investors said that an issuer
company’s business nature, prospectus and research reports are the primary decisive
factors for their IPO subscriptions. Interestingly, while retail investors said that IPO-
related articles and analysis appearing in the media (whether financial media or mass
media) had influenced their decision-making, professional investors seemed to
disagree.
The increase in privatization of state-owned enterprises (SOEs) from
Mainland China has resulted in Hong Kong’s domestic retail investors becoming
more active participants in stock trading. Most of the Hong Kong public expects the
trend to continue in the coming years, and believes that newly-public Chinese
companies are a worthwhile investment because they expect that the Chinese
government won’t allow its SOEs to become bankrupt. This reasoning supports the
increasing number of stock investments contributed by HK domestic retail investors.
A study of the psychology of Asian investors conducted by Citibank in 2005
(INSEAD Center for Decision Making & Risk Analysis, 2005) describes HK
domestic retail investors’ investing attitudes. It concludes that while most Hong

74
Kong retail investors are financially savvy and have a greater sense of long-term
investment than investors from Singapore and Taiwan, they are still too emotional
and over-confident about their investment decisions. The report indicates that most
HK retail investors make “financial decisions using their emotions, rather than
relying on logical decision-making.” The report also compares Hong Kong retail
investors with U.S. investors. It finds that Hong Kong investors usually trade more
frequently than U.S.-based retail investors, who are more rational about the financial
markets. It follows that issuer companies on the Hong Kong stock exchange can and
should appeal to the emotions of potential retail investors within their IPO
communications.
According to the 2006/7 Investor Perception Study Asia, by IR Magazine,
when asked to nominate the best investor relations practices for an IPO in Hong
Kong during that year, most professional investors named the Bank of China (IR
Magazine Asian Awards, 2006, p.58). They said, in summary: “Bank of China had
good publicity and media coverage, and investors could easily get information about
the company and the listing. The company made sincere efforts to keep investors
posted with the latest information.”

The Link Real Estate Investment Trust came
second to the Bank of China; professional investors remarked that it has always been
accessible to investors, and has informed investors in reasonable time (IR Magazine
Asian Awards, 2006, p.58): “The Link’s people promoted the company to the
investment community well, giving fund managers a good idea about the future of
the business. At the end of the presentation they provided plenty of useful reading

75
material.” In short, the study reveals that professional investors care most about an
issuer company’s media exposure, the availability of information relating to the
offering, and the company’s accessibility. They also ask that an issuer company
provide them with a clear corporate vision, including financial trails.
In summary, in addition to the active involvement in SEHK of Hong Kong’s
domestic retail investors, U.S.-based, UK-based and European institutional investors
are also a major investment community in SEHK. Most HK domestic retail
investors are passionate about investing in stocks, and trade frequently. They tend to
be middle-aged male investors with higher incomes and higher educations. An
appealing corporate story might appeal more to the typical Hong Kong domestic
retail investor than a long list of financial figures. For Hong Kong domestic
professional investors, key criteria for success include providing financially-
supported corporate stories in addition to information related to the current offering,
being accessible to investors, and creating positive media coverage.

3.1.2 Regulatory Landscape
Continuous communication throughout the IPO process is essential to a
successful IPO. In addition to the corporate and financial information included in its
prospectus, an issuer company may wish to employ a variety of communication
strategies to help its offering. A basic understanding of the major publicity and
marketing rules in Hong Kong helps an issuer company to effectively exercise
control over any and all information disclosed outside its prospectus.

76

A. Regulators

For a long time, two regulators have coexisted in Hong Kong’s securities
market: the Securities and Futures Commission (SFC), and Hong Kong Exchanges
and Clearing Limited (HKEx), which controls the Stock Exchange of Hong Kong
Limited (SEHK).
HKEx, the original regulator, holds shares listed in the Hong Kong securities
market which it operates and controls. Thus it is a profit-making, listed firm,
resulting in a potential conflict of interest between its own interests and its duties as a
regulatory body. Recognizing this conflict, in 2004 the HKSAR government made
the SFC the sole statutory regulator supervising the Hong Kong securities market,
with the goal of leveling the “playing field between HKEx and other listed
companies which subject to the Listing Rules of both the Main Board and GEM”
(Hong Kong Exchanges and Clearing Limited, 2004c).
It should be noted that, while the SFC is the principal regulator of all aspects
of securities and futures markets in Hong Kong (including the authority to supervise
HKEx, corporate governance, e-trading, etc.), as of today SEHK is the regulator of
the IPO market. An issuer company that seeks to list on the SEHK must file its
registration documents (including prospectuses and other marketing or publicity
documents) with the SEHK, a subsidiary of HKEx. The SFC’s marketing or
publicity guidelines can’t override HKEx’ listing rules. In summary, an issuer
company must submit its registration documents to both HKEx and the SFC for
review and examination.

77

B. Regulatory Requirements
12

Although there are listing rules that an issuer company must abide by, there
are no statutory securities regulations in Hong Kong that specify the kinds of
information a company can disseminate and the kinds of information they must
suppress. However, like other exchanges around the world, HKEx has mandated
listing rules that an issuer company must follow if listing on SEHK. In general,
HKEx’s listing rules are similar to those of other exchanges.
For example, under the Listing Rules of the Main Board mandated by HKEx,
an issuer company must file registration documents (including the prospectus) with
HKEx/SFC before it goes public. The registration documents should provide
sufficient issuer-related information to reasonably influence potential investors to
make their investment decision. All contents of the registration documents (including
the prospectus) must be true, accurate, not misleading, and contain facts that can be
easily verified; otherwise the information must be amended or deleted. If any
published information is different from that within a company’s prospectus, or is not
contained in the prospectus, the issuer company may need to explain the
discrepancies to the SEHK and may face a postponement of its listing timetable. As
in the U.S., routine communications to promote a company’s business, products and
services are allowed. Any offering-related promotional materials must contain this
“legend” in a prominent location: “This document does not constitute an offer or an

12
Hong Kong Exchanges and Clearing Limited. (2004b). HKEx Listing Rules. Regulatory
Framework and Rules. Hong Kong, China: HKEx. Retrieved January 16, 2007, from
http://www.hkex.com.hk/rule/listrules/listrules.htm

78
invitation to induce an offer by any person to acquire, purchase or subscribe for
securities being offered.”
Although most of the listing rules on the Hong Kong exchange are similar to
international standards for IPOs, the following two regulatory rules are noted.
Hong Kong’s Listing Rules are closer to those in the U.K. than those in the
U.S.: both practice a sponsor system that requires an issuer company to appoint a
credible sponsor as corporate financial adviser when preparing for listing. Under
Chapter 3 A.02 of the Main Board’s Listing Rules, HKEx mandates that “a new
applicant must appoint a sponsor to assist it with its initial application for listing.”
An appointed sponsor functions as an intermediary, coordinating between the issuer
company and HKEx/SFC, taking responsibility for undertaking due diligence work
on the behalf of the issuer company (not SFC’s duty), assisting the issuer company in
preparing the IPO, and then “endorsing” the issuer company within HKEx/SFC.
Sponsor firms are usually members of the underwriting syndicate (Deloitte Financial,
2006). Instead of directly undertaking due diligence work on behalf of an issuer
company, the SFC has a series of standards to oversee a sponsor firm’s conduct, and
to assess if the sponsor firm is eligible in terms of its internal controls or internal
systems, and its human, organizational, and financial resources. The SFC can also
impose sanctions, such as fines, suspension or revocation of licenses, on
intermediaries that fail to meet the required standards (Securities and Futures
Commission, 2005). By practicing the sponsor system, an issuer company in Hong
Kong is allowed to accelerate its IPO procedures.

79
For IPO communications in Hong Kong, the only relevant publicity and
marketing restrictions are covered by Rule 9.08 of HKEx’s Listing Rules. According
to Rule 9.08 of the Main Board Listing Rules, an issuer company cannot conduct any
unauthorized publicity or issue marketing materials or announcements about its IPO
offering before the hearing of the Listing Committee:
“Any publicity material or announcement referring to a proposed listing by a
new applicant which is issued prior to the meeting of the Listing Committee
held to consider such application must state that application has been or will
be made to the Exchange for listing of and permission to deal in the securities
concerned. Where any material relating to a proposed listing by a new
applicant is released without prior review by the Exchange before the
meeting of the Listing Committee to consider the application, the Exchange
may delay the timetable for the proposed meeting of the Listing Committee
by up to a month.”

Therefore, if an issuer company wishes to conduct any communication
related to its coming offering—such as information or announcements about the
securities’ purchase or sales—after filing its registration documents with the
SFC/HKEx, but before the final hearing of the Listing Committee, it must ask its
sponsors to submit those offering-related publicity materials to the Stock Exchange
of Hong Kong (SEHK) first. Until the SEHK reviews publicity and marketing
materials and says they have no further comment, an issuer company is not permitted
to make those materials public. Otherwise, the SEHK regards such unauthorized
offerings-related publicity announcements or publications as seeking to condition the
market, and the issuer company faces civil penalties or listing postponements for a
period of up to one month. Sometimes a company will even be asked by the SEHK
to make a statement of public apology. But in practice, even after reviewing, SEHK

80
does not usually approve offering-related publicity materials before the final hearing
of the Listing Committee.
In addition, Rule 9.08 also sets general restrictions on all offerings-related
publicity materials or announcements:
“All publicity material released in Hong Kong relating to an issue of
securities by a new applicant must be reviewed by the Exchange before
released and must be released until the exchange has confirmed to the issuer
that it has no future comments thereon. In addition, such publicity material
must comply with all applicable statutory requirements. For these purposes,
publicity material does not relate to an issue of securities if its purpose is the
promotion of the issuer or its products or business and not the promotion of
the securities to be issued.”

Hence, even after the hearing of the Listing Committee, prior to making
public any offerings-related publicity information an issuer company must ask its
sponsor to submit those offerings-related materials to SEHK, which must review and
approve the materials first.
Besides, according to SEHK’s definition, promotional materials which
require review include only those which relate to the issuer company’s offering, and
which are intended to promote the company’s stock issuance. Other publicity or
marketing materials aimed at promoting the company’s business, products and
services do not need to be reviewed and approved.
To sum up, an issuer company can release offerings-related publicity or
marketing materials on the condition that those materials are vetted and approved by
the SEHK first. This is prohibited only during the period after filing registration
documents and before the final hearing of the Listing Committee. However, other

81
publicity or marketing materials or announcements regarding the company’s
business, products and services are allowed throughout the IPO process.

3.1.3 Media Landscape

Both the financial media and the general media have always been channels
for disseminating accurate IPO-related information and news to retail and
institutional investors in Hong Kong. According to the investors’ IPO Investment
Experience survey by the SFC (Securities and Futures Commission, 2005), more
than 70% of HK retail investors say that articles and analysis generally available in
the mass media influence their investment decision-making process.
The mass print media in Hong Kong have a far greater circulation than
financial print media. For example, circulation of the mass daily newspaper Oriental
Daily News is over 500,000, but circulation of the financial daily paper Hong Kong
Economic Journal is around 20,000. However, discussion here of the Hong Kong
media landscape will focus only on the primary financial media outlets.

Table 12: Primary Financial Media Outlets for IPO communications in Hong Kong

Name Category Language Specialization Circulation
13

Hong Kong Economic Journal Print Daily Chinese Finance and
Business
20,000
Hong Kong Economic Times Print Daily Chinese Finance and
Business
80,479
South China Morning Post Print Daily English Chinese-Ethnic 104,552
Wall Street Journal Asia Print Daily English Finance and
Business
81,508

13
Hong Kong Audit Bureau of Circulations (2006). Retrieved June 20, 2006, from
http://www.hkabc.com.hk/en/index.htm

82
In general, as a result of its previous colonial history and cultural origins,
financial media outlets in Hong Kong can be divided into two categories: Chinese-
language financial media, and English-language financial media. In each category,
the most influential financial media for IPO activities are daily print (see Table 12).
The Hong Kong Economic Times, the South China Morning Post and the
Hong Kong Economic Journal are the three primary newspapers targeting investors,
and have the greatest influence and power in matters related to issuer companies.
The Hong Kong Economic Journal and the Hong Kong Economic Times are both
Chinese-language financial newspapers created by local publishers. While also
published locally, the South China Morning Post (SCMP) appeals to a general
readership.
Among these, the Hong Kong Economic Journal has the lowest daily
circulation (around 20,000), and this is shrinking. Although the Hong Kong
Economic Journal has a low circulation, its target audience is a significant one.
Founded in 1973, it was the very first business and financial media outlet in Hong
Kong, is recognized to be an authoritative and professional financial media outlet,
and hence is still quite influential. For financial professionals, the Hong Kong
Economic Journal provides abundant financial resources about stock fundamentals
(in its stock section), useful investment experiences and insightful analysis, as well
as comments for investment (in its investment section). It focuses on macroeconomic
aspects and engages in fundamental discussions about investing. For retail investors
and general readers, however, the content might appear to be a little too dry

83
compared to most global media publications today: it has fewer colorful pictures,
fewer pages, fewer advertisements, and is more technical. Considering that most
Hong Kong domestic residents are horse racing and gambling enthusiasts, it is
surprising that the Hong Kong Economic Journal does not cover this kind of news
(He, 2005). Perhaps most importantly, it has no corresponding online version, and its
corporate website is merely a webpage without daily financial news content, let
alone interactive databases. In today’s competitive media environment, where nearly
every financial media outlet competes to provide the most frequently updated
business and financial news, the Hong Kong Economic Journal has been gradually
losing ground.
The Hong Kong Economic Times has a much higher circulation (80,479) than
the Hong Kong Economic Journal, despite the fact that it was launched in 1988, far
more recently. To maximize its profits, the Hong Kong Economic Times is more
tailored to retail investors and middle-class readers than to financial professionals. It
covers a wide range of news, from politics, horse races and real estate, to
entertainment news, horoscopes and seasonal recipes. Despite its more varied
coverage, the Hong Kong Economic Times still covers insightful financial and
business news. It also dedicates a section of its pages to covering news and
information relating to the stock market. As it became more popular, and grew into a
financial news group, the Hong Kong Economic Times was eventually listed on the
SEHK on August 3, 2005.

84
Founded in 1903, the South China Morning Post (SCMP) is one of the two
domestic English newspapers in Hong Kong (the other is the Standard). It is also the
English newspaper with the highest circulation in Hong Kong, and lists on the SEHK.
Although SCMP is a generic paper, not specializing in finance, it covers business
and financial news extensively, and dedicates a “Hong Kong Stock and China
Stocks” section to providing updated news and in-depth analysis regarding IPO
activities. Many institutional investors acquire IPO-related information from the
SCMP.
The Wall Street Journal Asian—named The Asian Wall Street Journal prior
to October 17, 2005—is an English daily print outlet primarily covering Asian
business and financial news. The Asian Wall Street Journal was launched in 1976 as
Dow Jones & Company Inc. expanded its publishing business to Asia (Wall Street
Journal Asia, 2007). As its name implies, The Asian Wall Street Journal’s focus is
Asian news, whether political or economic. Like the U.S. Wall Street Journal, The
Wall Street Journal Asian provides a “Money & Investing” section, which covers
news and analysis regarding stock investment and recent IPOs. However, The Wall
Street Journal Asian only covers an IPO offering if it is of major significance.
As in the U.S., the daily publishing industry in Hong Kong has experienced a
series of setbacks. In 1995, the two largest daily newspapers, Apple Daily and
Oriental Daily News, initiated a cutthroat price competition. Following that, several
free newspapers, such as the Headline Daily, were also launched in Hong Kong.
Both of these developments had a great impact on the financial newspapers (Murphy,

85
2006). While their financial news coverage is not in-depth, these mass media outlets
do provide basic IPO-related news and information to modestly affluent retail
investors. Rule changes in 2006 also impacted print financial media outlets.
Traditionally, if a company made any decision that might affect its stock price, it was
required to take out advertisements in financial newspapers to notify its investors. A
new rule now permits companies to post their reporting online (Murphy, 2006).
Because a large proportion of financial newspapers’ revenue has been from such
announcements, domestic financial print media are expected to suffer from the
financial impact of the rule change.

3.2 IPO Communications Strategies

3.2.1 Strategy during the IPO Communications Process

3.2.1.1 Before the IPO (before the registration documents are formally submitted)

Before an issuer company has formally registered with the SFC/HKEx, it is
not on the regulatory radar and runs no risk of being censored by the SFC/HKEx.
Therefore, an issuer company should prepare as much as it can, increase awareness
of the company, and deliver its messages (even about its offering) during this stage
of the process.

A. Elevate Normal Business Communication Levels
According to the HKEx Listing Rules, an issuer company is permitted to
maintain its normal business communications (including routine advertising of

86
specific products or services) during the IPO process. But the communication level
should be consistent with previous standards. Therefore, in order to be able to
communicate more information and reach more potential investors after it registers
with the SFC/HKEx, an issuer company should start to increase its usual business
communication levels—for example, more frequent press releases, advertisements,
and media interviews with its executives—in advance of the IPO. In this way, even if
an issuer company merely maintains its usual course of business communications
with the media and potential investors during the IPO, it can in practice
communicate more than was historically the case.

B. Contemplate Corporate Stories and Prepare Key Messages
In advance of its IPO, an issuer company should consider what kind of
corporate story it wants to deliver to the media and to its potential investors. How
does the company compare itself to its competitors? What are its strengths and
weaknesses? The company should begin to analyze its market position during this
stage. After merging the corporate background, philosophy, strategic growth, vision
and mission into a solid investment story, the company should be able to establish its
primary messages in order to present its strengths and growth potential from
different angles, tailored to different media and different investors. An issuer
company should also develop a timeline to carry on its different messages (Yang,
2003).

87
C. Increase the IPO Awareness and Understanding about the Issuer Company
Well-known mega-cap companies and retail companies don’t have to worry
about media awareness in the early stage. But most of the media and potential
investors may know little about small-cap issuer companies or companies in the
manufacturing or construction industries. Before they register with the SFC/HKEx,
an advanced media relations outreach can help build awareness of such companies
among the media and potential investors. An issuer company might organize a media
tour of its plants or locations, allowing the media to understand how its business
model and production line work, and what its work environment looks like. Cynthia
Ng, Financial Communication Associate Account Director of Edelman HK, also
agrees that media coverage introducing a less-visible issuer company can help
elevate its awareness in advance of the IPO. An issuer company should also have
meetings with analysts and funds managers to introduce its business early during this
stage.

D. Disseminate Promotional Offerings-Related Information
Before entering the IPO process, an issuer company should have prepared its
registration documents for filing with the SFC/HKEx. Although at this stage the
prospectus has not yet been registered with the SFC/HKEx, and although a
prospectus cannot be delivered publicly, the issuer company can still print some
corporate and investment information, such as the company’s background, its
financial performance, and its plan for using the proceeds from subscriptions (Yang,

88
2003). Before submitting registration statements to the SFC/HKEx, even if rumors
exist about its coming offerings, it is still legitimate for an issuer company to conduct
communications regarding its offerings.

3.2.1.2 During the IPO (after the registration documents are formally submitted)

After an issuer company has registered with the SFC/HKEx, it is on the
regulators’ radar. According to Cynthia Ng, Financial Communication Associate
Account Director of Edelman HK, the best communications strategy for an issuer
company is to avoid discussing its offerings whenever it communicates with its
investors, as well as when it promotes itself via the media. However, while an issuer
company should avoid mentioning offerings-related topics, it can always take
advantage of the regulatory gray area and pitch from different angles.

A. Media Monitoring Before the Hearing of the Listing Committee
According to the HKEx Listing Rules, after the registration and statement
submission, but before the hearing with the Listing Committee, an issuer company
should avoid having any promotional communications, whether offerings-related or
not. “In practice, whether offerings-related or not, issuer companies should avoid
launching all proactive media outreach at least a week before the hearing of Listing
Committee,” says Cynthia Ng. “Even though issuer companies may be interviewed
by the media before the hearing of Listing Committee, issuer companies and the
media should have an agreement to avoid their interviews published during this

89
sensitive period.” In addition, during this period an issuer company should not
respond to any media inquiry or coverage; otherwise, they might face postponement
or penalty. However, while an issuer company should keep silent during this stage, it
can continue to monitor media coverage and keep a record of any erroneous
information. Once an issuer company emerges from this stage, it should actively
send “media alerts” to all media outlets, correct any erroneous information that may
have been disseminated, and prevent such misunderstandings from happening again
(China International Public Relation Association CIPRA, 2004b).

B. Pre-file offerings-related materials with the SEHK
Rule 9.08 of the Listing Rules requires an issuer company to ask its sponsor
to submit offerings-related materials to the SEHK first. This makes it possible for an
issuer company to compile a set of pre-approved offerings-related materials or
scripts in advance. Once the company needs to disclose materials regarding its data
and statistics to the public, it is free from regulatory restrictions and can immediately
disseminate the pre-approved information, such as offerings-related press releases, at
will.

C. Media Exposure: Press Conference Announcements
After an issuer company has registered with the SFC/HKEx, it is permitted to
conduct a press conference to announce its plans to go public, introduce itself to the
public, and allow the media to become more acquainted with them. Usually, the

90
press will want to conduct one-on-one interviews with the company’s management
after the press conference. It is therefore also important for an issuer company to
calibrate its messages, and the answers delivered by its management, with the media
in mind. It is a communications taboo if one senior executive has a completely
different answer for a question than another senior executive (Yang, 2003). If the
two different answers to the same question appear in the next day’s newspaper,
HKEx may offer an opinion on the discrepancy and a postponement of the offering
may result.
After the hearing of the Listing Committee, and about a week before the
formal offering date, an issuer company is permitted to hold a further press
conference to announce its offering price range and expected issuance amounts. The
company is also allowed to reinforce its business plan and promote its coming
offerings in this final press conference.

D. Media Exposure: Advertisement, Sponsorships and Corporate Philanthropy
Events
An issuer company must be careful about where, when and how to
communicate, so as not to violate HKEx’s Listing Ruling. Other communications
regarding its business, products and services are allowed throughout the IPO process.
This regulatory latitude in communications for IPOs is a big opportunity for an issuer
company to promote itself. After the IPO announcement at its press conference, the
media and potential investors have started to become aware that an issuer company is

91
going public. Hence, the best strategy during the IPO process is to maximize the
issuer company’s visibility. To achieve this goal of awareness, an issuer company
might invest in corporate image/branding advertisements, sponsor community or
social events, and make donations to charitable foundations. Some issuer companies
even prepare a corporate image/branding videotape and disseminate this to television
outlets for broadcasting (CIPRA, 2004b). Each time potential investors see an issuer
company’s advertisements, they are further instilled with the idea of what kind of
business the company operates, and what kind of products/services the company
provides. Such media exposure promotes the company’s business and products, and
helps to build its brand, but also serves as a reminder to potential investors of the
company’s up-coming offering. The more potential investors are aware of and
understand a company’s business and products, the greater the likelihood that they
will end up subscribing to its offering.

E. Media Exposure: Executive Interview and Prepare Media Training for Executives
During the IPO process, an issuer company is allowed to continue promoting
its business. Media interviews are the best way for an issuer company to convey
messages promoting its business to potential investors. While a company should
always avoid revealing offerings-related information (without filing with the SEHK
first), it can talk freely about its business models, its products and services, and
forward-looking information regarding its vision, projections and forecasts. In order
to ensure that media interviews throughout the IPO process are always newsworthy,

92
“different business news angles should be prepared,” says Cynthia Ng, HK
Edelman’s Financial Communication Associate Account Director. “Sometimes, one-
on-one briefs or off the record interviews (mutually consented to) also help issuer
companies respond to sensitive questions without violating the Listing Rules.”
However, sometimes even off-the-record comments and interviews regarding
sensitive issues may have potential risks. The media may break a previous agreement
in the case of a conflict of interest. Therefore, it is recommended that management
personnel not have direct conversations with the media, in order to avoid potentially
sensitive questions. It is suggested that all such questions be redirected to the
company’s IR team (Yang, 2003). If it is necessary to arrange a personal interview
with management personnel, IR professionals should also attend the interview to
protect sensitive information (Yang, 2003). Management personnel should, moreover,
receive media training. An issuer company’s executives should understand what they
should say and what they had better not say, and acquire the skills for responding to
sensitive questions.

F. Investment Community Outreach: Investor Presentations, Analysts Meetings,
Fund Managers Meetings
An issuer company should continue communicating with the investment
community (i.e. portfolio managers, analysts, and institutional investors), and
provide them with updated information and market conditions. In addition to small-
group meetings with analysts and fund managers, large-scale investor presentations

93
are also common. Investor presentations usually include all of the diverse investment
communities; attendees may include up to 300 institutional investors and portfolio
managers. For this kind of large promotional meeting, an issuer company’s
executives must receive public speech training in advance.
Some investment advisor companies’ internal tasks are divided clearly. An
issuer company should make sure to invite the right people to its investor
presentations when drafting the invitation lists. The issuer company should figure out
analysts’ responsible areas or industries. If they invite the wrong industry analysts to
their meetings, the meetings are not productive or purposeful for anyone (Yang,
2003).

G. Investment Community Outreach: Global Roadshows
While investor presentations primarily target Hong Kong’s domestic
professional investors, roadshow presentations primarily target international
professional investors. Global roadshows are usually geared towards small-group
meetings, though preparation levels for most of these communications efforts match
those for large-scale investor presentations in Hong Kong, such as production of
films, PowerPoint slides, anticipation of Q&As, and other promotional materials.
Management personnel should also receive communication skills training, and
should remember not to deviate their presentation contents from their IPO
prospectuses. Promotional materials used in the presentations should not be
distributed afterwards.

94

3.2.1.3 On the Offering Date and After the IPO

It is very common in Hong Kong for an issuer company to have a large
ceremony in front of the Hong Kong Stock Exchange to celebrate its stock offering.
After the stock market closes on each of the offering days, a press kit is delivered to
the media. On the night of the first offering day, there is generally an opening night
gala, to which many large fund managers and analysts are invited. A well-
functioning IR website should also be created to ensure that the company’s
communication channels with its investors are open. The IR website can be built
before or during the IPO, then immediately opened to the public once the offering
date is passed.
Finally, an IPO is just the beginning for a public company. After the IPO, an
issuer company should release its financial performance—like earnings estimates—
and have earning meetings, periodically, to communicate its corporate transparency
with its investors and strengthen their confidence. If a company voluntarily releases
its earnings reports more frequently than is required by HKEx, it can further elevate
the company’s corporate transparency and its investors’ confidence.

3.2.2 Case Study of Bank of China Hong Kong IPO Communications

3.2.2.1 Introduction

Just before the Christmas holiday in 2000, the Hong Kong-based
international arm of the Bank of China asked potential underwriters to pitch for the
restructuring work prior to its IPO. After 18 months of arduous restructuring and

95
listing preparations, the Bank of China Hong Kong (BOCHK) eventually listed on
the Main Board of the Stock Exchange of Hong Kong (SEHK) on July 25, 2002,
with the ticker “2388” in Hong Kong, and issued an American Depositary Receipt
(ADR) in the United States (Bank of China Hong Kong Limited, 2005a). The large-
scale listing provides not only a milestone but also a foundation for China’s financial
reform. BOCHK’s IPO activity has had a great influence on the Asian economy, and
especially on China’s capital market.
International finance and economic magazines applauded BOCHK as it
successfully completed this difficult but meaningful restructuring and privatizing
task (Bank of China Hong Kong Limited, 2005b). Asiamoney called it the “Overall
Equity Deal of the Year” and “Privatization of the Year”; IR Magazine awarded it
“Best Investor Relations for an IPO”; and China International Public Relations
Association awarded its “Gold Winner of the Sixth China Golden Awards for
Excellence in Public Relations”. After its successful IPO, and an accreditation
process, BOCHK joined the Financial Times Stock Exchange (FTSE) 100 Index on
July 25, 2002, became a Morgan Stanley Capital International (MSCI) index
constituent stock on August 31, 2002, and joined the Hang Seng Index on December
2, 2002. At the end of 2003, BOCHK was also appointed the only Renminbi (RMB)
clearing bank in Hong Kong (Bank of China Hong Kong Limited, 2005a).

96
3.2.2.2 History: Background of BOCHK
The Bank of China Hong Kong Limited (BOCHK) was originally just the
Beijing-headquartered Bank of China’s operational affiliate in Hong Kong. However,
BOCHK was also the most profitable and international branch of its parent bank. As
part of the Chinese government’s efforts to restructure its state-owned enterprises
(SOEs), a series of reforms of its enormous but inefficient banking system had been
initiated in 1994. As China was going to join the World Trade Organization (WTO)
in December 2001, the need to make its SOEs more efficient and competitive to
prepare for foreign corporate competition was becoming urgent. The pressure forced
China to reform, restructure and privatize its big four state-owned banks, including
the second largest Bank in Mainland China—the Bank of China. However, the
restructuring and privatization process was not an easy task. Non-performing loans
(NPLs) have been a notorious issue for state-owned banking groups. In addition to
bad debts, all thirteen branches of the Bank of China in Hong Kong had been
operating under their own loan policies, had their own management and their own
offices. Before formally listing on the SEHK, it was necessary to merge those banks
and restructure them. While merging only two different organizations can be difficult,
merging and restructuring thirteen institutions seemed like an impossible mission.
Nearly ten months later, on October 1, 2001, the largest banking merger ever
undertaken in Hong Kong was completed. Today’s Bank of China Hong Kong was
merged from all thirteen of the Bank of China’s disparate subsidiaries in Hong Kong,
including ten Hong Kong branches of the Mainland China-based banks, two

97
domestic banks in Hong Kong, and a credit card company. While the listing of
BOCHK did not represent the first Chinese company to go public abroad, it was the
first state-owned bank listing abroad. Considering the long and large-scale internal
clean-up operation required, and the process of merging a record number of
institutions, while there was much harsh criticism from the media and professional
investors—discussed later—BOCHK’s privatization was nevertheless highly
successful.

3.2.2.3 Struggles: The Media and the Investment Community’s Attitude
A. Adverse Market
Initially, the BOCHK IPO deal was expected to raise about 4 to 5 billion US
dollars (Leahy, 2001, p.35), and to have dual listings in both the Hong Kong (SEHK)
and New York Stock Exchanges (NYSE). However, global stock markets were then
in a recession. The adverse market condition had resulted from a series of
unexpected factors: the technology bubble meltdown, the 9/11 terrorist attacks in the
U.S., and the continuing deterioration of the global economy in late 2001. As a
result, most U.S. and European investors had become cautious when it came to
investing in stock markets. Compared to the Asian markets, which were also in
recession, stock markets in the U.S. and Europe were crashing and, naturally, the
demand for IPO subscriptions was very low. To make matters worse, these events
were followed by the Enron bankruptcy in December 2001, and yet another series of
corporate scandals in 2002. Enron’s questionable auditor, Arthur Andersen,

98
happened also to be BOCHK’s IPO auditor, an association which raised questions
from some of the investment community about BOCHK’s transparency. As Arthur
Andersen was formally indicted, BOCHK’s filings with the SEC could not meet the
expected deadline. On March 7, 2002, BOCHK finally confirmed that it would be
abandoning its plan to list on the NYSE, and would focus on listing only on the
SEHK (The Wall Street Journal, 2002, p.A21). BOCHK chose instead to issue an
American Depositary Receipt (ADR) offering in the U.S.

B. Non-Performing Loans (NPLs)
In terms of assets, Bank of China Hong Kong was at the time second only to
HSBC in Hong Kong, and was generally believed to be the most profitable and
international branch of the Bank of China, which was also the best of China’s four
state-owned banks (Cockerill, 2001, p.188). However, even the Bank of China’s
NPLs were then worth 2.2 times its equity (Cockerill, 2001, p.188). While
BOCHK’s NPL ratio had fallen to $3.8 billion (9%), the ratio was still twice that of
the Hong Kong average (4%-5%) (Cockerill, 2002, p.78). NPLs have traditionally
been an issue of great concern to investment communities.

C. Parent Company’s Two Corporate Scandals in a Row
In January 2002, BusinessWeek uncovered a corporate scandal involving
BOCHK’s parent bank group, Bank of China. It was reported that Bank of China’s
previous chief, Wang Xuebing, was suspected of corruption, and that he had made

99
questionable loans totaling $23 million to his wife in 1994 (BusinessWeek, 2002,
p.64). The issue hadn’t been exposed until BOC itself paid the amount via its New
York office. Then, as U.S. authorities began to investigate, Wang Xuebing was
suddenly removed from his position of President of the China Construction Bank
(CCB). Liu Mingkang, BOC’s and BOCHK’s chairman and President, immediately
flew to New York to settle this incident, and ended up paying the U.S. authorities a
penalty of $20 million. However, BusinessWeek harshly questioned the Chinese
banking group’s lack of managerial controls, and BOCHK’s ability to go public
(BusinessWeek, 2002, p.64). “…it could be years before effective new institutions to
prevent massive fraud and theft are in place. Prospective investors in China’s banks
should heed the warning” (Clifford, 2002, p.32). Then, another shocking corporate
scandal followed: this time, employees of the Kaiping branch of the Bank of China
were reported to have embezzled $480 million over a nine year period. This is the
largest embezzlement incident ever to have occurred in China.
While BOCHK had no direct involvement in the two scandals, a series of
such negative news stories from BOCHK’s parent company cast a degree of doubt
on BOCHK’s corporate image. The Hong Kong domestic newspapers were frenzied,
and suggested that BOCHK should consider immediately stopping its plan to list
(Cockerill, 2002, p.78). The investment community also questioned BOCHK’s
corporate governance and internal control. It was commonly suggested that, given
the scandals, BOCHK might misappropriate the proceeds raised.

100
3.2.2.4 Respond: IPO Communication Strategies
3.2.2.4.1 Before the IPO
A. Primary research to understand potential domestic investors
As BOCHK ended up choosing to list only on the SEHK, the HK domestic
investment community’s sentiments about BOCHK would surely affect its
subscription results. Hence there was a need to conduct primary research about
BOCHK’s domestic investors in terms of their investing inclination, expected returns,
their risk-taking attitude, and what kinds of communication media would be most
effective in reaching them. The BOCHK in-house communications team launched a
market survey. This survey included several focus groups and a campaign of
telephone interviews aimed at investigating attitudes towards the IPO. Conjoint study
analysis, a regression method of statistical analysis, was applied to analyze and
interpret the results, in order to ensure their reliability (China International Public
Relation Association CIPRA, 2004a).

B. Prepare primary communications messages tailored to the investment
communities
Whether targeting professional investors or retail investors, communications
messages from issuer companies must always aim to provide compelling and unique
corporate stories, to enhance investor confidence and, consequently, to persuade
investors to subscribe to the offering—in this case, that of BOCHK.

101
Initial responses from professional investors focused on the more negative
aspects of BOCHK, primarily its NPLs and the scandals. In response to this, tailored
messages were used to address investors’ concerns about the negative media
coverage and BOCHK’s fundamental problems, and to provide credible and
convincing evidence that BOCHK’s upcoming offering was a worthwhile investment.

Response to NPLs
Professional investors were most concerned about BOCHK’s non-performing
loans (NPLs). They wanted to hear credible figures from independent and reliable
third parties. So, in order to reassure professional investors that the NPL figures were
credible, in addition to its own auditors (biased) and accountants from Arthur
Andersen (doubtful), BOCHK brought in another auditor and reporting firm,
PricewaterhouseCoopers, and hired independent loan reviewers. BOCHK also
established an independent internal control system “with a loan committee reporting
directly to the board and its four new installed independent directors” (Cockerill,
2002, p.78). BOCHK’s NPL ratio in 2001 was two times higher than the Hong
Kong average of 4.7%. BOCHK tried to explain to the investors how far they had
gone to improve this, and provided future estimates to build investor confidence. For
example, BOCHK provided professional investors with a clear financial plan: that by
the end of 2002, the NPL ratio would fall to 8%, and was expected to fall to between
4% and 6% in 2003. By early 2003, the NPL ratio was projected to fall below the
Hong Kong average.

102

Responses to Corporate Scandals
As soon as the two incidents broke out in the news, the Bank of China
immediately fired the executives involved, and severely punished those responsible
to make an example of them. These actions were aimed at showing the determination
of the bank to take such massive crimes very seriously. In order to alleviate
investors’ skepticism and concerns, chairman and President Liu Mingkang also
promised that such scandals would never happen again. When interviewed by the
media, he reassured the public that proceeds raised from its IPO offerings would be
allocated according to the prospectus. Liu was quoted by the media as saying: “One
thing I can promise you. Since I took the chairmanship of the Bank of China, nothing
like Kaiping and the New York branch will be coming again” (Pottinger & Stein,
2002, p.A8). In addition, BOCHK also attempted to disengage its operational
connection from the parent company, and to show its determination to become more
transparent.
In addition to responding in an effort to neutralize negative issues, BOCHK
could tell many good investment stories to professional investors based on its
financial and operational fundamentals. After an arduous restructuring and internal
clean-up process, BOCHK’s commitment to becoming a more transparent and profit-
oriented bank was obvious, especially as part of the big picture that the Chinese
government was presenting—that this was the privatization role model for other
Chinese banks in the future.

103
In terms of assets, BOCHK was the second-largest banking group in Hong
Kong. It was a widely recognized banking name, and possessed a massive base of
loyal customers: up to a third of the Hong Kong domestic population. Its parent bank,
the Bank of China, had over 13,000 branches in Mainland China, and was also one
of the three note-issuers. As the need for cross-border commercial interaction grew,
BOCHK had projected itself as the biggest “Chinese offshore reminbi center”

(Loong, 2002, p.16)

for the foreseeable future. In addition, the international market
was already acquainted with BOCHK, and viewed it as one of the most competent of
China’s banks (Leahy, 2002, p.27). All of this constituted a worthwhile investment
story for professional investors.
For retail investors, BOCHK’s key messages had to do with a positive and
visible corporate image. After the first stage of the primary investors’ survey,
BOCHK learned that, in general, the public knew its brand name well, and most
perceptions of the bank were positive because retail banking had been BOCHK’s
core business and nearly a third of Hong Kong’s domestic population were already
loyal customers. The existing customer base alone was expected to generate huge
and strong subscription demands for BOCHK’s offerings (Leahy, 2002, p.27).
Emotional appeals to investors are particularly effective in Hong Kong. The
experiences of fund managers in Hong Kong’s retail market also show that when
domestic retail investors evaluate investment opportunities, their evaluating metrics
are fairly subjective (Loong, 2002, p.16). Since retail investors may not have a full
understanding of the meanings of earnings metrics like NPL ratio and P/E ratio,

104
stock fundamentals do not matter so much to them. Domestic retail investors tend to
invest emotionally in the stock market, and follow the trails of others. The
psychology of many domestic retail investors’ investments in the stock market tends
to parallel their gambling habits in the casino or horse-racing games: risk taking of
that nature influences their final subscription decisions. Some locals even allegorize
the Hong Kong stock market as “the second place in the city that allows legalized
gambling after the Hong Kong Jockey Club” (Jacob, 2002, p.18).
Besides this, in 2001 China was commonly estimated to have 7% economic
growth, so any communications messages linking BOCHK to China would help to
make BOCHK’s offering seem potentially lucrative.
Moreover, if BOCHK’s existing customers merely recognized its brand
image and financial products/services, it was likely that they would also subscribe to
its issuance. So, in order to stimulate domestic retail investors’ demands for
subscriptions, it was imperative to maximize BOCHK’s visibility and create a
credible buzz.
BOCHK decided to capitalize on the strength of its existing, extensive retail
customer base and branch network, and initiate a series of systematic and organized
large-scale media campaigns to increase its visibility and reinforce its corporate
image. The strategy aimed to maximize visibility by incorporating its offerings into
advertisements about its financial products and corporate (brand) image, as well as
media exposure of its philanthropic and sponsorship events. By aligning the

105
marketing strategy with its preferred corporate image, BOCHK’s upcoming offering
was made more desirable for target audiences.

3.2.2.1.2 During the IPO
A. The Investment Community Outreach
a. Professional Investors: Analysts Meetings
The strategy of meeting with analysts was intended to emphasize that
BOCHK represented a turnaround story, and that it was a worthwhile investment
regardless of its parent bank’s corporate scandals. It was a concern that professional
investors might buy into the stereotype that BOCHK lacked efficiency and a real
profit base as a part of China’s SOEs. It was certain that analysts would also ask
whether BOCHK could turn previous bad debts into profits.
During its ongoing restructuring process, BOCHK instituted a merit-based
salary system, instead of the SOEs’ common equal-payment system, and allowed
management to have stock option opportunities (Clifford, 2002, p.32, p.35). With
BOCHK’s reported earnings of $355 million and assets of $98 billion in 2001
(Clifford, 2002, p.32, p.35), its chairman and President Liu Mingkang persuaded
investors that the bank was reform-oriented and would be able to make profits, and
he promised them that BOCHK would continue to improve its efficiency by further
restructuring and by reducing its bad loans problems (Leahy, 2002, p.27). When
BOCHK was questioned about its internal control and governance issues, it provided
evidence that it had brought independent board members from outside and

106
established tougher credit-risk management. BOCHK’s new auditor,
PricewaterhouseCoopers, was in charge of establishing its new risk-management
system (Clifford, 2002, p.32, p.35).
To ensure that BOCHK management was able to clearly articulate to analysts
why its offering was a worthwhile investment, in-house communication teams also
prepared materials and anticipated Q&A documents, and provided speech training
and rehearsals for executives. These documents were distributed to management
representatives who presided over the meetings, and executives rehearsed the
material roadshows (CIPRA, 2004a).

b. Professional Investors: Pre-Roadshow to Test the Market
In order to position BOCHK’s corporate and investment story well, it
launched a “pre-roadshow to test the water—to gauge investor sentiment ahead of an
officially-sanctioned proper roadshow to market the IPO” (Loong, 2001, p.6). The
pre-roadshows also allowed BOCHK to tap international investor enthusiasm for the
mainland’s rapidly growing economy.

c. Professional Investors: Global Road Shows from July 8 to July 18
Since shares sold to international institutional investors usually accounted for
a significant portion of an issuer company’s total offerings, global roadshow
presentations were another important part of BOCHK’s IPO communications. In
order to maximize outreach to international institutional investors, BOCHK launched

107
geographically extensive roadshow presentations, which ranged over 100 meetings,
16 cities, 11 countries (including countries in Asia, Europe and North America) and
11 days, starting on July 8 and ending on July 18 (Cockerill, 2002, p.78). BOCHK
also divided its senior management into a “green group” and a “red group” for
roadshow presentations to enhance communication efficiency. By doing so,
BOCHK could visit more countries and meet with more investors in a limited time.
BOCHK began preparing promotional materials for its global roadshow
presentations in early June. The final decision was to shoot a set of short promotional
films that would express a sense of modernization (CIPRA, 2004a). From mid-June
on, all of the senior BOCHK executives who would participate in the global
roadshows were trained and underwent internal rehearsal roadshows (CIPRA, 2004a).
BOCHK also conducted panel discussions to prepare for the specific demands of
different areas around the world, and ensured that its executives were familiar with
appropriate response techniques.
Since its IPO announcement, almost every domestic print publication in
Hong Kong had printed stories about different issues related to BOCHK. In order to
ensure that its global roadshow participants could use the most recent information
about BOCHK, and about global and domestic market conditions, relevant news
clippings were faxed to them as reference material every day, allowing them to be
more prepared when meeting with institutional investors at roadshows (CIPRA,
2004a).

108
It should be noted that at this time the U.S. stock market had fallen 14%, and
the Dow Jones Industrial Average had crashed by 283 points (Cockerill, 2002, p.78).
At the time BOCHK’s roadshow presentations were launched, stock market
conditions were the worst they had been in the U.S. in 30 years (Cockerill, 2002,
p.78). So, the reaction BOCHK received from investors was rather chilly. According
to the bankers who participated in BOCHK’s roadshow presentations, “investors in
Singapore were cynical but the further we got from Asia the more explaining we had
to do. Interest was strong, but the markets were very soft and investors had lost their
balance” (Cockerill, 2002, p.78).

d. Professional Investors: A Small Portion of Issuance Pre-sold to Strategic Investors
BOCHK’s President and Chairman, Liu Mingkang, revealed on CNBC Asia
that BOCHK would allow a small portion of its offering to be pre-sold to “strategic
investors” (Leahy, 2001, p.35): “Most strategic partners are world first-class
qualified financial institutions. They will bring us not only the equity… [but also]
expertise in management especially how to manage the change in today’s colorful
world”. Analysts generally agreed that BOCHK’s strategy to bring in strategic
investors first could help stimulate the offering price.

109

e. Retail Investors: Press Conference
Retail investors had fewer channels than institutional investors through which
to get BOCHK’s offering information, so frequent public announcements to reveal
BOCHK’s offering related information, tailored to retail investors, were necessary.
By keeping investors informed of BOCHK’s business and financial performance via
credible media outlets, it was hoped that retail investors would gain more investment
understanding and thus greater confidence in BOCHK.
Months before its offering, BOCHK began disclosing its 2001 business
performance and semi-2002 financial performance results to the general public via
press conferences, and to professional investors via analyst meetings, teleconferences
and luncheon meetings. As the offering drew near, on July 7, 2002, BOCHK called
an IPO press conference to announce its IPO plan—indicating the stock price range
as well as the IPO date—and to introduce its underwriters, strategic investors, joint
global coordinators and co-sponsors. Since a total of 46 domestic and international
media outlets and over 100 journalists were present at this press conference, BOCHK
also took advantage of the situation to exhibit all of its IPO promotional materials,
and its investor relations (IR) website and IR hotlines. After the conference, all
related materials were placed on its IR website.
Then, on July 14, 2002, BOCHK held another press conference. Via
teleconferencing, BOCHK senior executives who had been presenting roadshows in
London introduced BOCHK’s background and financial conditions to press

110
conference attendees. BOCHK executives in Hong Kong, together with the joint
global coordinators, announced the issuance amounts, the price range, retail premium,
and where to collect subscription application forms as well as the stock code and
offering timetable. BOCHK also announced that it had opened a 10% tranche of its
issuance to retail investors, and offered them a special 5% discount (Euroweek, 2002,
p.15).

f. Retail Investors: Endorsement Backed by Domestic Tycoons and Corporations
BOCHK’s existing customer base was a mixture of individuals and corporate
conglomerates. While individual customers were excited about the coming offering,
they were biding their time until the formal offering period, from July 15 to July 19.
Meanwhile, local corporations stepped in first.
Just a week before the formal offering period, London-listed Standard
Chartered Bank, which was already one of the largest banks in Hong Kong,
announced plans to expand into Mainland China and to commit $50 million for a
strategic stake in BOCHK (Jacob & McGregor, 2002, p.26).

Following that, more
public announcements about corporate support for BOCHK’s offering appeared in
everyday media coverage. Hong Kong’s richest tycoon, Li Ka-Shing, was quoted as
saying “We have confidence in BOC”, and announced that his two flagship
companies, Hutchison Whampoa and Cheung Kong, would commit about 200
million US dollars (Lau & Leahy, 2002, P.31) as a subscription to BOCHK. Then,
business magnates from seven other domestic corporations—Citic Pacific, Great

111
Eagle Holdings, Hand Lung Development, Henderson Land Development, Kerry
Properties, Lai Sun Development, and Sun Hung Kai Properties—also announced
their subscriptions to BOCHK, totaling about 550 million US dollars (Lau & Leahy,
2002, P.31). Aside from Standard Chartered Bank, it was estimated that over 750
million US dollars, accounting for one-third of the proceeds, had been pre-subscribed
by domestic property developers and mainland Chinese-based companies, both of
which were also BOCHK’s customers.
The media attributed the show of support by these corporations to strategic
considerations based on a mutually beneficial relationship. All of the companies that
offered support tended to have business operations in Mainland China. It was felt
that they (strategically) had to show their faith in and support (and perhaps patriotism)
of China’s privatization efforts in exchange for goodwill and benefits later on. A
European fund manager harshly commented on these corporate endorsements by
saying: “The corporates have stepped in, but if you were looking at [BOCHK] on
fundamentals, it would be an act of faith to buy” (Jacob, 2002, p.27).
However, no matter what the real motives of the corporations behind the
scenes might have been, their public endorsements via the media of BOCHK’s
offerings generated extensive and contagious interest and confidence among
domestic retail investors. These “credible” corporate endorsements paved the way
for potentially huge demands for subscriptions from retail investors.

112

g. Retail investors: Stimulation of Investors’ Sentiment during the Offering Period
From the beginning, most retail investors realized that a mega-IPO deal like
that of BOCHK might not happen frequently, so they were excited about this rare
investment opportunity. After the overwhelming corporate support of the
subscription, many retail investors rushed to collect subscription application forms
during the formal offering period, from July 15 to July 19. BOCHK also recognized
that the incubated expectations that had been created might bring them even higher
levels of demand for subscriptions, so it capitalized on the contagious atmosphere
and on retail investors’ psychology to trigger even higher demand during the offering
period.
During the offering period, almost every Hong Kong media outlet sought
interviews with BOCHK’s senior executives, especially on the first day, July 15, and
the last day, July 19. Therefore, BOCHK arranged for ushers to lead representatives
of the media to its bank branches to film scenes of thousands of retail investors
waiting in line to collect subscription application forms. On July 19, the last day of
the offering, a 16-seat bus was even assigned to carry media representatives to
BOCHK’s branches to film the busy scenes of retail investors submitting their
subscription application forms (CIPRA, 2004a).

113
B. The Media Outreach
a. The Media Outreach: Media Interviews
BOCHK had purposely taken advantage of every opportunity to deliver its
messages to the media in early 2002. BOCHK had also arranged for its President
and Chairman, Liu Mingkang, and other senior executives to be interviewed
individually or in groups by multiple media outlets in order to make reporters fully
aware that BOCHK’s upcoming offerings were a worthwhile investment. Whenever
the media had doubts or questions about BOCHK, and especially when there were
negative opinions, BOCHK’s chairman and underwriters always stepped up to
defend the bank at the earliest opportunity. Negative impressions were never left
unchallenged. For example, when some suggested that BOCHK had postponed its
listing on NYSE primarily due to its accounting practices, and that the outstanding
debts it carried hadn’t met the guidelines set by the generally-accepted U.S.
accounting principles (GAAP), the President and Chairman of both the Bank of
China and BOCHK, Liu Mingkang, immediately countered this speculation with the
fact that not listing on the NYSE had been because BOCHK had lacked sufficient
transparency (Cockerill, 2002, p.78). By having an aggressive media outreach policy,
BOCHK could largely lead public opinion in the direction it wanted.

b. The Media Outreach: Media Visibility via Advertisements
As has been noted, retail investors do not necessarily have sufficient
professional investing knowledge to understand BOCHK’s problems—its NPLs, for

114
example—and they tend to invest emotionally and follow the successful trails of
other investors. In order to stimulate domestic retail investors’ demands for
subscriptions, it was necessary to maximize BOCHK’s visibility in Hong Kong.
Hence, from the beginning of 2002, BOCHK invested in a range of media
advertisements related to its corporate image and financial products:
Corporate Image Advertisements
BOCHK sponsored a financial news network’s ten o’clock news program,
in order to broadcast its corporate image advertisements, and to align those with a
Chinese Lunar New Year theme. These advertisements also appeared in print
publications, on buses, and in other outdoor locations (CIPRA, 2004a).

Financial Products and Services Promotion
Advertisements featuring BOCHK’s Small and Medium Enterprises (SMEs)
financing, tax loans, investment funds, monthly stocks saving plan, online securities
trading and women’s credit cards, were broadcasted on TV, aired on radio stations,
printed in newspapers and magazines and placed on buses (CIPRA, 2004a).
In June and July of 2002, just two months before BOCHK’s listing, an
intense series of advertisements was presented. BOCHK was the first commercial
organization permitted to continue its IPO promotion one week before listing. In
addition, BOCHK played all of its advertisements related to corporate image and
financial products more intensely on TV, in print publications and outdoor locations.

115
c. The Media Outreach: Media Visibility by Sponsorship and Corporate Philanthropy
Corporate Philanthropy
Through press conferences and print advertisements, the public was made aware of
BOCHK’s corporate philanthropy. These philanthropic programs included the grand
opening of the Hong Kong Society for the Protection of Children BOC Nursery
School, Green Schools Election, university and college scholarship award
ceremonies, etc. (CIPRA, 2004a).

Commercial Sponsorship
BOCHK also sponsored the 2002 “Ten Outstanding Young Persons” selection in
Hong Kong, the BOCHK Charity Race, and the issuance of the 5
th
Hong Kong Mass
Transit Railway (MTR) souvenir tickets. Press conferences and related
advertisements for these events also provided BOCHK with media exposure (CIPRA,
2004a).

d. The Media Outreach: Reinforcement of Connection with Mainland China
The general expectation that Mainland China’s economy was rapidly growing,
and the stereotype that China would ultimately back its SOEs’ operations to some
degree, resonated in most domestic investors’ minds. According to the psychology of
domestic Hong Kong retail investors, it would definitely cause no harm to invest
money in China-concept stocks, especially because the banks’ deposits interest rates
were so low. Domestic companies with business operations in Mainland China

116
might also receive the benefits of strategic relationships in the future. In addition,
BOCHK, as its name made clear, was originally from Mainland China. Stressing this
connection helped to boost the bank’s corporate image, further helping to attract
domestic investors’ demand for subscriptions. BOCHK was able to solidify
investors’ enthusiasm by reinforcing its connection with Mainland China and
connecting its public image to China.
BOCHK is located in Hong Kong’s tallest building, the Bank of China Tower,
which was designed by the Chinese-American architect I.M. Pei (who also designed
Pyramide du Louvre). In order to strengthen its corporate image, in-house
communication teams designed a series of promotional materials featuring this well-
known building, and presented them during IPO promotional events. This theme was
also applied to the cover of BOCHK’s public offering prospectus. In addition,
BOCHK also redesigned its logo and letterhead based on the original red Chinese
letter design - -, which represents “China” (CIPRA, 2004a).

3.2.2.1.3 On The Listing Day and After IPO
BOCHK’s strategy on training days was to receive as much media coverage
as possible. On July 25, BOCHK had a first-day listing and trading ritual in the
SEHK. BOCHK’s management was present, and it also invited governmental
officials from the HKSAR and the Hong Kong Monetary Authority (HKMA). The
listing ritual also included giving one million Hong Kong dollars to “The
Community Chest of Hong Kong”, a charitable foundation. On the evening of July

117
25, BOCHK held its IPO gala celebration. Tung Chee-hwa, the then HKSAR Chief
Executive, co-hosted the gala with BOCHK’s executives. Thousands of guests were
present at the ceremony, including celebrities from different fields (CIPRA, 2004a).
After formal listing, BOCHK’s strategy was to keep open its
communication channels with the investment community. BOCHK continued to
reinforce its corporate and brand image to maintain investors’ confidence. After
becoming a publicly traded company, BOCHK also prepared interim results
announcement reports, and periodically organized press conferences and shareholder
meetings to disclose its most recent business and financial performances. BOCHK
also broadened its existing investor relations (IR) functions and IR website contents
(CIPRA, 2004a).

3.2.2.5 Comments
BOCHK ended up raising HK$20,860,000,000 (or US$2.8 billion) and
selling 2,453,918,500 shares (CIPRA, 2004a). While BOCHK’s IPO issuance was 5
times oversubscribed by institutional investors, it was 27 times oversubscribed by
domestic retail investors (Lau & Leahy, 2002, p.31). Originally, BOCHK had only
opened a 10% tranche of its issuance to retail investors. As the demand for
subscription became higher than expected, 35% of the issue was allocated to Hong
Kong retail investors, and the non-Hong Kong retail placement tranche was 65%. Of
the 65% non-Hong Kong retail placement tranche, 30% was allocated to Hong Kong

118
domestic corporate investors, 23% was allocated to institutional investors, and 12%
was allocated to Japanese retail investors (Euroweek, 2002, p.16).
In retrospect, BOCHK’s communication strategies contributed enormously to
the bank’s success in terms of subscriptions. While institutional investors accounted
for only 23% of the issue, because of the depressed U.S. and European economies,
the domestic corporate involvement, plus the domestic retail investors’ strong
subscriptions, accounted for 65%, and Japanese retail investors accounted for 12%.
The allocation of BOCHK’s issue illustrates that investor sentiment matters a
great deal in the Asia/Pacific region. U.S. institutional investors invest in newly
issued companies based on their confidence in fundamentals like transparency and
corporate governance. Especially as market conditions in Europe and the U.S. in
2002 were not positive, those who did invest tended to invest more cautiously, and
had less appetite for possibly-risky IPO deals like that of BOCHK. In contrast, Hong
Kong domestic retail investors and corporate investors readily invest in newly issued
companies based on their faith and confidence, rather than on fundamentals. Given
the difficult timing and market conditions BOCHK faced, overall investment
community outreach strategies and media outreach strategies did work to create
extreme demand from domestic investors.
Although institutional investors ended up as only 23% of the total, BOCHK’s
investment story convinced those “thrift” institutional investors who were willing to
consider the bank’s offerings at a time of very low investor confidence. That
Japanese retail investors also accounted for 12% of the total implies that BOCHK’s

119
roadshow presentations and extensive media outreach also played an influential role
on impacting overseas investors’ investment and decision-making processes.
To sum up, as Chris Cockerill comments on BOCHK’s overall offering in
Euromoney, “this deal succeeded. True, BOC Hong Kong remains a long way from
being perfect, but it is taking steps in the right direction” (Cockerill, 2002, p.78).

120

Chapter 4: Comparison, Analysis & Conclusion

The comparison and analysis here will be conducted based on the previously-
discussed securities industry landscape, regulatory landscape, financial media
landscape and communication strategies, as well as the case studies.

4.1 Securities Industry Landscape

A. Securities Market Condition for IPO

The world’s economies are closely intertwined. In retrospect, the condition of
the U.S. stock markets has pretty much been echoed by what has gone on in Hong
Kong’s. Both stock markets experienced regulatory reform as a result of the fallouts
from stock market crashes. In the U.S., the Wall Street crash of 1929 brought about
the 1933 Securities Act (the SEC was established one year later), and the Enron and
WorldCom corporate scandals triggered the enactment of the 2002 Sarbanes-Oxley
Act (SOX). In Hong Kong, the Wall Street crashes in 1987 led to the first reform to
ensure the SFC’s regulatory status, and the 1997 Asian financial crisis led to another
Hong Kong stock market reform, to establish HKEx. As of today, conditions in both
stock market are quite robust for IPO activities.

B. Major Stock Exchanges

The U.S. has three primary stock exchanges (AMEX, NYSE and NASDAQ);
Hong Kong has only one stock exchange (SEHK). Both the NYSE & NASDAQ are
non-profit entities, but the SEHK is a subsidiary of HKEx, a profit-making entity.

121
Table 13: Comparison of the U.S. and Hong Kong Stock Exchanges

Stock
Exchanges
Market Capital of New
Listings in 2005
Newly Listed Companies
in 2005
Total Listed in 2005
AMEX US$ 6,597 billion
97
(63 domestic, 34
overseas)
595
(495 domestic, 110
overseas)
NASDAQ US$39,490 billion
139
(117 domestic, 22
overseas)
3164
(2832 domestic, 332
overseas)
NYSE US$135,719 billion
146
(127 domestic, 19
overseas)
2270
(1818 domestic, 452
overseas)
SEHK
HK$762,107 billion
equivalent to US
$95,517 billion
67
(67 domestic, 0 overseas)
1135
(1126 domestic, 9
overseas)

In terms of market capital of new listings in 2005, the SEHK was second only
to the NYSE, followed by NASDAQ and AMEX. However, all three of the U.S.
stock exchanges have overwhelmingly more listed companies than SEHK. Despite
the fact that most newly listed companies are in the U.S., this numerical advantage is
still domestic-based: only a small number are from overseas. But all newly listed
companies in Hong Kong in 2005 were domestic companies (including companies
from Mainland China). This implies that the Hong Kong stock market is less
globalized than those in the U.S., and that more international issuer companies
choose to list in the U.S. stock exchanges.
The NYSE is the counterpart of the Hong Kong Main Board: they are for
large-cap or mature companies, and have higher listings requirements. NASDAQ in
the U.S. is the counterpart of the Hong Kong Growth Enterprise Market (GEM), for
small-cap or new companies which have less-demanding listing requirements. In
2005, more companies listed in HKEx’s Main Board (57) than listed in Growth
Enterprise Market (GEM) (10). In the U.S., 147 companies listed in the NYSE and

122
139 companies listed in the NASDAQ. While the listing numbers in NYSE and
NASDAQ are quite close, the market capital of the new listings in the NYSE is far
greater than the new listings in NASDAQ.
When choosing to list in the U.S. and/or Hong Kong, issuer companies
usually have strategic considerations about their local business operations. They
might have plants or operational businesses in the U.S. and want to acquire US
dollars and achieve global branding goals. They might also have operational
businesses in Hong Kong and Mainland China, and seek to establish a relationship
with the mainland Chinese government or Hong Kong local residents. But to
maximize their offerings, most companies choosing to list in Hong Kong often
follow the same pattern: a public offering on SEHK, and issue of global depositary
receipts (GDRs) in the U.S.

C. The Investment Community

Investors in both the U.S. and Hong Kong are financially savvy. But the
psychology of investing in each country is quite different. In general, U.S. investors
tend to be more rational and conservative. HK investors tend to be more impulsive
and speculative. They show a marked preference for China-concept companies.
Some of them even think of their investment in the stock market as a kind of
gambling.
After the high-tech bubble burst, and corporate scandals ensued, retail
investors in the U.S. experienced a series of crises in confidence. Now, their criteria
for investing decisions relate to internal issues, such as an issuer company’s internal

123
controls and corporate governance. U.S. professional investors also care more for
nonfinancial performances and intangible assets like management credibility. The
communications strategy of an issuer company should be to provide these investors
with confidence and transparency regarding the company. In general, most U.S.
investors tend to diversify their investment portfolios and very few are heavily
invested in potentially risky investments like IPOs. IPO investors have no patience
for issuer companies that can’t meet their expectations. So the IPO communications
strategy has been to balance shareholders’ expectations. U.S. IPO investors
nowadays prefer issuer companies with good management teams and growth chances.
The Hong Kong stock market is a balanced field for domestic retail (30%)
and professional investors (27%). Fewer U.S. retail investors are involved in the
Hong Kong securities market. Domestic retail investors account for one third of
Hong Kong’s adult population. As such, most IPO communications strategies in
Hong Kong are tailored to domestic retail investors. Nearly 80% of those domestic
retail investors have subscribed to IPOs in the past five years. Their decision-
making criteria relate to the nature of the business, prospectus, research reports on
the media, and China SOEs-concept stocks. While financially savvy, Hong Kong
retail investors tend to be somewhat emotional and over-confident when making
their investment decisions. Even HK professional investors evaluate issuer
companies by their positive publicity and media coverage.

124
4.2 Regulatory Landscape

A. Regulators

In the U.S., the SEC is the single regulator of the entire securities and futures
market, including IPO-related document filing and publicity rules. In Hong Kong,
while the SFC is the regulator of the complete securities and futures market, HKEx
(SEHK) is the regulator of IPO-related document filing and publicity rules. And,
unlike the SEC, HKEx is itself also a listing company. So, in Hong Kong, an issuer
company’s filings are reviewed by both the SFC and the SEHK. In the U.S. and
Hong Kong, an issuer company must register with the regulators and comply with all
the exchange’s listing requirements before it is allowed to trade on an exchange.

B. Major Regulatory Requirements

In the U.S., publicity-related requirements are regulated under Section 5 of
the 1933 Act by the SEC. Restrictions are divided into three periods. During the pre-
filing period, a company can issue press releases to announce when its offering will
be made, and what kind of securities it intends to issue. But it cannot put a press
release to promotional use by identifying its offering price and its underwriters’
names, or by declaring what kinds of assets and liabilities it has. All press releases
must be accompanied by a legend. During the waiting period, an issuer company can
issue a preliminary prospectus and tombstone ads, so long as they carry the legend.
During the quiet period, every piece of information must comply with the prospectus
contents.

125
According to new rules which became effective in 2005, seasoned companies
with a reporting history with the SEC are free from the quiet period restrictions, and
may conduct oral or written communications beyond their prospectuses. Less-
seasoned companies can now regularly publicize forward-looking information,
which had been forbidden. In addition, all issuer companies are allowed to employ
modern technology tools, such as CD-ROMs, to present their publicity materials and
interviews in electronic formats.
Throughout the entire IPO process (pre-filing, waiting and quiet period), if an
issuer company has a history of regular or periodic meetings with shareholders and
financial analysts, they are allowed to continue their normal business
communications with these groups. Initiation of investment and media outreach
shortly before the filing does not constitute such a history. An issuer company cannot
conduct any offerings-related publicity or communications; the SEC considers such
communications as “conditioning the market”, and will postpone the company’s
registration statements’ effectiveness, or its scheduled offerings. Any
communications concerning the offerings are liable to being interpreted as
conditioning the market, and are not permissible in the U.S.
In Hong Kong, publicity-related requirements are regulated under Rule 9.08
of HKEx’s Listing Rules. All offerings-related promotional materials must have
legends in a prominent location. Throughout the IPO process, an issuer company is
allowed to conduct communications regarding its business and products with its
shareholders and the media, so long as these are routine business activities. In

126
general, offerings-related communications are allowed, but SEHK has to know of
them before they are made public. Such communications are prohibited only during
the period after registration documents are filed, and before the final hearing of the
Listing Committee. Before an issuer company files its registration statements with
the SFC/HKEx, its communications are not censored and restricted. After the filing,
but before the hearing of the Listing Committee, no offerings-related
communications materials are approved by the SEHK. But after the hearing of the
Listing Committee, any offerings-related publicity materials which are reviewed and
approved by the SEHK first, are considered to be permissible communications.
In the U.S., an issuer company comes under the scope of SEC censorship
even before it registers with the SEC. For example, if a company initiates intense
commercial communications immediately before its filing, this will be regarded by
the SEC as “conditioning the market”. In practice, quiet period rules begin to apply
even before the formal filing, and all business communications must have a history
of about one year. In Hong Kong, however, before an issuer company formally
submits registrations documents to the SFC/HKEx, it can freely communicate
promotional information related to its offering. Since it hasn’t yet come under the
radar of the SFC/HKEx, there is no risk of being censored. HKEx’s definition of
“routine” business communication is also very flexible, and not as demanding or
stringent as that of the SEC. A company may conduct its normal business
communications more frequently just months before its filings. In the U.S., generally
speaking, offerings-related publicity information other than the preliminary

127
prospectus is not permitted. But in Hong Kong, offerings-related publicity
information is permissible, so long as it is pre-vetted by the SEHK. After the hearing
of the Listing Committee, HKEx may impose any restrictions on what kinds of
communications an issuer company can engage in, however companies are also
given a great deal of latitude regarding what kinds of communications are allowed.

4.3 The Financial Media Landscape

In the U.S., the financial media are dominated by the financial news and
information publishing conglomerate Dow Jones & Company. Dow Jones not only
owns the popular and historical daily newspaper The Wall Street Journal, and the
weekly magazine Barron’s, but also offers financial news to the largest financial
cable network, CNBC, and other US-based radio stations, and has co-ownership,
with the Reuters Group, of Factiva.
Moreover, the financial and business daily newspapers are centralized into
one single news conglomerate. While the Wall Street Journal is primarily a financial
and business newspaper, it has the second highest circulation in the U.S. (even
higher than general mass media like the New York Times and Los Angeles Times).
Other papers specializing in finance and business tend to be very small-scale, and do
not enjoy the circulation of the Wall Street Journal.
In contrast, no Hong Kong daily which specializes in finance and business
has the dominance of the Wall Street Journal; none of them has a prominent
circulation. Circulations of financial and business newspapers in Hong Kong are

128
much lower than those of general mass daily prints (about one fifth). And, unlike in
the U.S., each of Hong Kong’s financial media is an independent domestic company.
While the Wall Street Journal was first published in 1889, and Barron’s in
1921, the authoritative Hong Kong Economic Journal was not first published until
1973. Most of Hong Kong’s financial print media have a short history compared to
those in the U.S., and are in the initial stages of their ongoing evolution.
While all primary financial print media in the U.S. are in English, only half of
the media in Hong Kong are in English (the South China Morning Post and the Wall
Street Journal Asia), and the other half are in Chinese (the Hong Kong Economic
Journal and the Hong Kong Economic Times). This implies that half of the
financial-specialized print media in Hong Kong are tailored to domestic retail
investors. There are many retail investors in Hong Kong, and these print
publications are the primary channels to reach them.
The U.S. has greater diversity of media channels for IPOs. In addition to print
media, newswires, websites and financial-specialized TV networks are alternatives
for financial news. Both the U.S. and Hong Kong have experienced a depression in
their respective financial media.

4.4 Comparison of IPO Communications Strategies & Case Studies

Because of the regulatory requirements in the U.S., an issuer company should
prepare as early as possible in advance of its offering, and act like a public company,
in order to comply with SOX. It should also disclose financial reports regularly with

129
the SEC. As U.S. investors often lack confidence in companies’ internal controls,
acting like a public company can enhance corporate transparency and help to build
investors’ confidence.
In addition, the psychology of U.S. investors seems to be to pursue more
stable and long term investments. They tend to think that investing directly in stock
might be too risky. A company must provide U.S. investors with more investing
incentives, so they can come to trust the company.
If an issuer company has a history of normal business communications with
its potential investors and the financial media, it will have greater latitude to provide
potential investors with such investing incentives during the quiet period. For
example, if an issuer company has no routine TV commercials about its corporate
image, no sponsorship or corporate philanthropy, and does not issue regular
performance-related and forward-looking press releases, intense publicity starting
shortly before its filing will create the impression that it is trying to condition the
market.
As noted in the MasterCard case study, the MasterCard CEO not only
repeatedly promoted MasterCard’s business but also provided forward-looking
information via press releases. If no previous communications history had existed,
MasterCard might have been accused of breaking the gun-jumping rules. Increasing
a company’s regular business communications level in advance of its IPO can help it
to communicate more information when it otherwise would be more constrained. In
the same way, if an issuer company has no regular history of granting the media

130
interviews in advance of its offering, doing so during the IPO, even if no mention is
made of the offering beyond normal daily business communications, this can still
constitute hyping under the current regulations. All of this discussion illustrates the
importance of starting to raise the level of regular business communications years
before the IPO.
Although there are no SOX requirements in Hong Kong that force companies
to act like public companies before the IPO, the HKEx Listing Rules allow an issuer
company to continue practicing its normal business communications, in a manner
consistent with previous levels, during the IPO process. So, if a company begins to
increase the frequency of its routine business communications, such as
advertisements and media interviews, it can maintain such communications
throughout the IPO process. Unlike the strict definitions of “historical” or “regular”
business communications in the U.S., the SFC/HKEx is quite flexible about what
constitutes “routine”. Some issuer companies in Hong Kong start their business
communications shortly before they submit their registration documents. Unlike in
the U.S., this practice is legitimate in Hong Kong.
Additionally, because the SFC/HKEx doesn’t censor an issuer company’s
communications activities before it formally registers with the SFC/HKEx, there is a
good deal of leeway in terms of the communications strategies a company may
pursue. Before filing with the SFC/HKEx, an issuer company can legitimately
disseminate its corporate information and offerings-related information. This would
clearly cross the regulatory lines in the U.S.

131
Before their IPOs, Hong Kong issuer companies in lower visibility categories
can also organize media tours, to allow the media to visit their companies or
manufacturing factories, know their businesses better, etc.
Whether in the U.S. or Hong Kong, investors and the financial media insist
on hearing issuer companies’ stories. If an issuer company can intertwine its
compelling corporate story with investing incentives, integrate them into its key
messages and keep reinforcing those key messages, the messages will be sure to
constitute an intriguing investment story and tout more subscriptions.
In addition, both U.S. and Hong Kong issuer companies initiate their investor
relations programs early, in advance of the IPO. Experienced investor relations
professionals from outside are brought in to help issuer companies launch their
investment community outreach. After the establishment of an IR program, IR
communication professionals conduct communications skills training of the
company management, so that they can promote their company and its IPO without
deviating from its prospectus.
While media interviews are permissible in the U.S., in order not to violate the
gun-jumping rules, in practice most companies’ executives usually avoid being
interviewed by the media, or stay completely silent even before their filings. The
SEC’s judgment as to whether an executive interview constitutes a form of
“conditioning the market” is subjective. In the MasterCard case, the management not
only refused to comment on any inquiries regarding their offerings, but also refused
to make public announcements about its rescheduled offerings, other than what was

132
already contained in the prospectus, in order to avoid being involved in any possible
accusation of hyping. In Hong Kong, interviews with executives are very common
communication strategies for issuer companies. On the condition that the
management mentions no offerings-related information, they are allowed to promote
their business and communicate forward-looking information. If the management
desires to reveal offering-related information, it can compile in advance a set of
offerings-related materials or scripts to be pre-approved by the SEHK. Once they
need to disclose such materials regarding their company’s data and statistics to the
public, they are free from regulatory restrictions and can immediately disseminate
the pre-approved information.
Corporate image and brand advertisement is also common in Hong Kong for
issuer companies. In the U.S., however, any attempts by companies that have a
public history of less than one year to build a corporate image and/or engage in brand
advertisements can be constituted as “conditioning” the market.
In Hong Kong, after roadshow presentations, all promotional materials used
in the presentations, such as slides and films, are forbidden to be distributed to others.
But in the U.S., the new rules allow issuer companies to turn their roadshow
presentations into electronic formats and post them on their websites. This can help
U.S. issuer companies reach more retail investors.
Finally, investor predispositions influence IPO communications in both the
U.S. and in Hong Kong. In the U.S., investors pursue secure investments based on
fundamentals, so transparent communications with a clear corporate profile are

133
important. In Hong Kong, the most active investors are domestic investors,
especially domestic retail investors. They pursue investment goals based more on
faiths, and the endorsement of other influential and successful investors, professional
or otherwise. This psychological attitude of Hong Kong retail investors, in which
they align investing with a kind of gambling, can be seen in the Bank of China Hong
Kong (BOCHK) case study. The high demands from Hong Kong domestic investors
were akin to a subscription fad. The image is of thousands of retail investors waiting
in line to collect subscription forms, despite knowing little about the fundamentals of
BOCHK. They invested based on their faith in China-concept stocks, other domestic
corporate public endorsements, and the media frenzy. BOCHK retail domestic
investors range in age from 20 to 70. Therefore, what resonates with Hong Kong
domestic retail investors who pursue China-concept stocks may be the infusion of
Chinese cultural and traditional factors, with which these investors are familiar
regardless of their age.
Table 14: Comparison of IPO Communications Environments and Strategies
in the U.S. and Hong Kong

Attribute U.S. HK
Securities market conditions Robust Robust
Stock exchanges 3, non-profit entities
AMSE, NYSE and NASDAQ
1, profit-making entity
SEHK
Market capital of new
listings in 2005
NYSE US$135,719 billion,
NASDAQ US$39,490 billion
AMEX US$6,597 billion
SEHK HK$762,107 billion
equivalent to US$95,517
billion
Stock exchanges
globalization in terms of
newly listed companies in
2005
More globalized
139 listed in NASDAQ
(domestic 117, overseas 22)
146 listed in NYSE
(domestic 127, overseas 19)
97 listed in AMEX
(domestic 63, overseas 34)
Less globalized
67 listed in Hong Kong
(domestic 67, overseas 0)

134
Table 14, continued
Attribute U.S. HK
Investment criteria Intangible assets:
*Internal controls
*Corporate governance
*Management credibility
*Business nature
*Prospectus
*Research reports on the
media *China SOEs-concept
stocks
Investors’ attitude Logical and rational
(less frequently trade)
Emotional
(more frequently trade)
Investment on IPOs Less passionate, patient Like gambling, passionate
IPO regulators SEC (1934) SFC (1989)
HKEx (2004)
IPO regulatory
requirements
(similar)
*Legends are required for all promotional offering-related
material
*Registration documents filings are required
*Normal business communications are permissible
* “Conditioning the market” is totally forbidden
IPO regulatory
requirements
(different)
*Normal business
communication must have a
year history or it will still be
regarded as “conditioning the
market.”
*During the pre-filing period,
companies have started their
“quiet period.”
* Generally, offering-related
publicity is impermissible.
*“Routine” business
communication has much
latitude to carry on.
*Before submitting the
registrations documents,
companies are still free from
the SFC/HKEx radar.
*On the premise that SEHK
pre-vet, offerings-related
publicity is permissible.
Financial media *Centralized, mainstream
media
*Media monopoly
*Diverse (print, web and
cable)
*Print media with longer
history
*English based
*Scattered, less-mainstream
*Independent
*Primarily daily print
*Print media with shorter
history
*Half English and Half
Chinese
Communications strategies
(similar)
*Prepare as early as possible
*Increase normal business levels
*Contemplate an appealing corporate story and prepare key
messages
*Establish a IPO communications team (IR and PR included)
*Have strategic transactions, including restructure and
partnership
*Prepare media training and public speaking for management
*Establish disclosure policies and procedures
*Launch investment community outreach to increase the IPO
awareness and understanding about issuer company (i.e.
building relations with potential investors in advance of the IPO
and roadshow presentations)
*Avoid offerings-related information and communications
deviating from prospectus.
*Release frequent reports and establish IR website after the IPO

135
Table 14, continued

Attribute U.S. HK
Communication
strategies (different)
*Act like a public company by
file reporting with the SEC
regularly and complying with
the SOX
*Avoid any offering-related
communications
*Avoid quoting by the media
*Make publicity information
into electronic formats (i.e.
electronic roadshows)
*Manage revenue expectations
*Balance shareholders’
expectations after the IPO
*Corporate image/branding
ads.
*Disseminate offering-related
information before the IPO
*Media tour before the IPO
*Media interviews
*Media monitoring
*Compile pre-approved
offerings related information
*Offerings-related press
conferences
*Stimulate domestic investors’
demand for subscriptions
Case study MasterCard
*Messages:
- Global customer-based
payment processing brand
- Continuous profit and growth
*Primary Research:
- Consult with other public
companies’ CEO and CFO
*Media interview
- No interview with CEO
*Strategies:
- Act like a public company
early
- Launch IR program
- Low-key media relations
- Investment community
outreach and roadshow
presentations
Bank of China Hong Kong
*Messages:
- International China-originated
modern banking group
- Continuous profit and growth
- Turnaround story
*Primary Research:
- Conduct survey on domestic
investors via focus group and
telephone interviews
*Media interview
- Frequent interviews with the
CEO
*Strategies:
- Aggressive media outreach
and exposure (i.e. press
conference)
- Aggressive investment
community outreach
- Media monitoring
- Third party endorsements
- IPO promotions one week
before listing

4.5 Conclusion

Domestic investors’ psychology, and regulatory limitations, primarily shape
U.S. and Hong Kong IPO communications strategies. While practiced tactics may
vary somewhat because of cultural differences among the media and investors in
each country, in many ways the communications strategies in each country are quite

136
similar. Both markets highlight the importance of preparing as early as possible, in
order to be free from domestic regulatory limitations. Strategies like communication
team establishment, key message preparation, and roadshow presentation, are the
same. While communications strategies in the U.S. are influenced largely by the
regulatory requirements, those in Hong Kong seem to be primarily affected by the
investors’ psychology. Those different communications techniques may be replicable
but not applicable across the two environments. Some IPO communications
techniques in Hong Kong are quite informative, but would totally cross regulatory
lines in the U.S. Some IPO techniques in the U.S. may be replicable and applicable
in Hong Kong. However, since Hong Kong has no regulatory requirements like
SOX, and no quiet period rules, to replicate the U.S. communications techniques
seems unnecessary, time-consuming and cost-consuming. Nevertheless, extensive
comparison of the IPO communications environments and strategies in these two
spheres still provides a blueprint for global financial PR/IR practitioners.
The author hopes this study will set the basic groundwork for further
researchers into this interesting and timely topic.

137
Bibliography

Anonymous (January 28, 2002). Something Is Rotten In China’s Banks.
BusinessWeek, issue 3767, p.64. Retrieved February 12, 2007, from ProQuest
database

Anonymous (March 7, 2002). Bank of China (Hong Kong) May Not List in New
York. The Wall Street Journal, p.A21. Retrieved February 12, 2007, from ProQuest
database

Anonymous (July 15, 2002). Hong Kong’s Landmarks Step Up to Bank of China’s
IPO. Euroweek, issue 761, p.15. Retrieved February 12, 2007, from ProQuest
database

Anonymous (July 29, 2002). BOC HK Slips in Early Trade as China Tel Preps
Autumn IPO. Euroweek, issue 763, p.16. Retrieved February 12, 2007, from
ProQuest database

Anonymous (November 18, 2006). IPOs Boost Hong Kong Market. Asia Times
Online. Retrieved January 20, 2007 from
http://atimes01.atimes.com/atimes/China_Business/HK18Cb01.html

Audit Bureau of Circulations (USA) (2006). Top 200 Newspapers by Largest
Reported Circulation report. Retrieved February 20, 2007, from
http://www.accessabc.com/reader/top150.htm

Bank of China Hong Kong Limited. (2005a). Corporate Fact Sheet. Hong Kong,
China: BOCHK. Retrieved January 7, 2007, from
http://www.bochk.com/ir/corpfs_e.html

Bank of China Hong Kong Limited. (2005b). Credit Ratings and Awards. Hong
Kong, China: BOCHK. Retrieved January 7, 2007, from
http://www.bochk.com/ir/cra_award_e.html

Barron’s (2007). Consumer Media Group. Retrieved February 20, 2007, from
http://www.dj.com/Products_Services/PrintPublishing/Barrons.htm

Benmsten, L. (March 2001). News, Rumors and Innuendos: The Rise of the
Financial Press. Investor Relations Update. Vienna, VA: National Investor Relations
Institute (NIRI)

Bloomberg Television.(2007). Bloomberg Television Introduction. Retrieved March
16, 2007 from
http://about.bloomberg.com/about/media/advertise/btvus.pdf

138

Blowers, S.C., Griffith, P.H. & Milan, T.L. (October 8, 1999). The Ernst & Young
Guide to the IPO Value Journey. New York: Wiley

Bradsher, K. & Barboza, D. (January 16, 2007). Hong Kong and Shanghai Duel for
Financial Capital. New York Times, p.C3

Chan, C. (October 20, 2006). ICBC Completes Record IPO as Demand Tops $500
Billion. Bloomberg.com. Retrieved January 21, 2007 from
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aiQPA9nAjxss

China International Public Relation Association (CIPRA) (2004a). Bank of China
Hong Kong (BOCHK) Case: The Winner of the Sixth China Golden Awards for
Excellence in Public Relations in Financial PR field. ChinaPR.com.cn. Retrieved
September 19, 2006 from
http://www.chinapr.com.cn/web/NewsCenter/ViewNews.asp?ID=7449
(Chinese version)

China International Public Relation Association (CIPRA) (2004b). Chinese National
Offshore Oil Corp. (CNOOC) Case: The Winner of the Fifth China Golden Awards
for Excellence in Public Relations in Financial PR field. ChinaPR.com.cn. Retrieved
September 19, 2006 from
http://www.chinapr.com.cn/web/NewsCenter/ViewNews.asp?ID=7469
(Chinese version)

Chussudovsky, M. (November 1997). The Global Financial Crisis. Canadian
Dimension, 31:6, p.29. Retrieved February 20, 2007, from ProQuest database

Clifford, M.L. (January 28, 2002). Banks under a Cloud; Scandal At Bank of China
Highlights Questions about China’s Big Four. BusinessWeek, issue 3767, p32, p52.
Retrieved February 12, 2007, from ProQuest database

CNBC (2007). About CNBC U.S. Retrieved February 20, 2007, from
http://www.cnbc.com/id/15907487/site/14081545/

CNNMoney (2007). Media Kit. Retrieved February 20, 2007, from
http://money.cnn.com/services/mediakit/

Cockerill, C. (June 2001). Bad Debts Just Get Bigger. Euromoney, issue 386, p.188.
Retrieved February 12, 2007, from ProQuest database

Cockerill, C. (October 2002). Chapter of Accidents with a Happy Ending.
Euromoney, 33:402, p.78. Retrieved February 12, 2007, from ProQuest database

139
Cole, B.M. (October 29, 2003). The New Investor Relations: Expert perspectives on
the state of the art. New York: Bloomberg Press

Deloitte Financial (2006). China: Hong Kong SAR. Strategies for going IPO, p.21.
Retrieved February 17, 2007, from
http://www.deloitte.com/dtt/cda/doc/content/GCSG%20IPO_Eng_HK_20Ap
r06_sec.pdf

Dow Jones & Company (2007). About Dow Jones. Retrieved February 20, 2007,
from
http://www.dj.com/TheCompany/AboutDowJones.htm

Dow Jones & Company (2007). Dow Jones & Company Is a Finalist in Five Codie
Award Categories for Its Electronic Publishing Segment. Retrieved February 20,
2007, from
http://www.dowjones.com/Pressroom/PressReleases/Other/US/2005/0119_U
S_DowJones_7116.htm

Draho, J. (2006). The IPO Decision: Why and How Companies Go Public.
Northampton, MA: Edward Elgar Publishing

Ernst & Young (2004). Global IPO Survey 2004. New York: Ernst & Young.
Retrieved February 20, 2007, from
http://www.altassets.com/pdfs/EY_Global_IPO_Survey_2004.pdf

Ernst & Young (2006). Accelerating Growth - Global IPO Trend 2006. New York:
Ernst & Young. Retrieved January 21, 2007, from
http://www.ey.com/global/download.nsf/International/IPO_-
_Global_IPO_Survey_2006/$file/E&Y-SGM-GlobalIPOSurvey2006.pdf

Fleischer, V. (December 2, 2006). The MasterCard IPO Protecting the Priceless
Brand. Harvard Negotiation Law Review. Retrieved February 2, 2007, from
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=888923

Geddes, R. (2002). IPOs and Equity Offerings: Securities institute Global capital
market (1st edition). Burlington, MA: Butterworth-Heinemann

Halperin, A. (December 27, 2006). New York: No Longer the IPO King.
BusinessWeek.com. Retrieved January 21, 2007, from
http://www.businessweek.com/investor/content/dec2006/pi20061227_94476
2.htm

140
He, X. (August 3, 2005). Hong Kong Economic Times Newspaper Listing Create
Miracles During the Stock Market Crash. Xinhuanet.com. Retrieved February 22,
2007, from
http://big5.xinhuanet.com/gate/big5/news.xinhuanet.com/newmedia/2005-
08/03/content_3304867.htm
(Chinese version)

Hong Kong Audit Bureau of Circulations (2006). Retrieved June 20, 2006, from
http://www.hkabc.com.hk/en/index.htm

Hong Kong Exchanges and Clearing Limited. (2004a). History of HKEx and Its
Markets. Hong Kong, China: HKEx. Retrieved November 20, 2006, from
http://www.hkex.com.hk/exchange/history/history.htm

Hong Kong Exchanges and Clearing Limited. (2004b). HKEx Listing Rules.
Regulatory Framework and Rules. Hong Kong, China: HKEx. Retrieved January 16,
2007, from
http://www.hkex.com.hk/rule/listrules/listrules.htm

Hong Kong Exchanges and Clearing Limited. (2004c). Introduction to Regulatory
Framework. Regulatory Framework and Rules. Hong Kong, China: HKEx.
Retrieved January 16, 2007, from
http://www.hkex.com.hk/rulereg/introreg/introreg.htm

Hong Kong Exchanges and Clearing Limited. (2004d). Listing Matters and Listed
Companies. Hong Kong, China: HKEx. Retrieved November 20, 2006, from
http://www.hkex.com.hk/listing/listing.htm

Hong Kong Exchanges and Clearing Limited. (2006a). Cash Market Transaction
Survey 2004/05. Hong Kong, China: HKEx. Retrieved February 10, 2007, from
http://www.hkex.com.hk/research/cmtrsur/CMTS05.pdf

Hong Kong Exchanges and Clearing Limited. (2006b). Retail Investor Survey 2005.
Hong Kong, China: HKEx. Retrieved February 10, 2007, from
http://www.hkex.com.hk/research/reinvsur/RIS2005_A.pdf

Hong Kong Special Administrative Region (SAR) government, The (2006). Hong
Kong as a Service Economy. Hong Kong Fact Sheets. Retrieved February 20, 2007,
from
http://www.info.gov.hk/hkfacts/servecon.pdf

141
INSEAD Center for Decision Making & Risk Analysis (2005). Asians Are
Influenced By Emotions When Making Investment Decisions. Singapore: INSEAD.
Retrieved February 12, 2007, from
http://www.insead.edu.sg/asiafinance//documents/CDMRA_release01_June2
005.pdf

Jacob, R. & McGregor, R. (July 8, 2002). Bank of China Prices IPO. Financial
Times., p.26. Retrieved February 12, 2007, from ProQuest database

Jacob, R. (July 12, 2002). Red Chips Line UP for Stake in BOCHK. Financial Times,
p.27. Retrieved February 12, 2007, from ProQuest database

Jacob, R. (July 23, 2002). Last of The Bulls Line Up As Bank of China Opens Shop:
Excitement About Hong Kong IPO Shows A Lot Of Faith In Market. Financial
Times, p.18. Retrieved February 12, 2007, from ProQuest database

Kawamoto, D. (May 17, 2004). Salesforce’s Stock Debut Delayed. CNET News.Com.
Retrieved January 8, 2007, from
http://news.com.com/Salesforces+stock+debut+delayed/2100-1012_3-
5214420.html

Lau, J. & Leahy, J. (July 26, 2002). Bank of China Fails To Shine On Debut: The
Company’s Weak IPO Contrasts with the Patriotic Support it Received Before The
Issue. Financial Times, p.31. Retrieved February 12, 2007, from ProQuest database

Leahy, J. (October 24, 2001). Bank of China Unit Seeks Partners Ahead of IPO.
Financial Times, p.35. Retrieved February 12, 2007, from ProQuest database

Leahy, J. (July 22, 2002). Higher Price Set for Bank of China Issue Strong Support
for Hong Kong IPO. Financial Times, p.27. Retrieved February 12, 2007, from
ProQuest database

Learmonth, M. (June 18, 2006). Biz net builds buzz: CNBC aims to expand its
daytime aud into Evening. Variety. Retrieved February 20, 2007, from
http://www.variety.com/article/VR1117945435.html?categoryid=14&cs=1

Lee, J. & Chang, V. (2003). IPO Activities in Hong Kong. Hong Kong, China: SFC
Research Paper. Retrieved February 12, 2007, from
http://www.sfc.hk/sfc/doc/EN/research/research/rs%20paper%2010.pdf

Lettieri, L.D. (February 2002). It’s Elemental Effective Use of Corporate Web Sites.
Investor Relations Update. Vienna, VA: National Investor Relations Institute (NIRI)

142
Loong, P. (November 2001). Bank of China Completes Merger-Now for That IPO
Window Asiamoney. 12:9, p.6. Retrieved February 12, 2007, from ProQuest
database

Loong, P. (August 2002). Bank of China: The Story behind the Success. Asiamoney.
13:7, p.16. Retrieved February 12, 2007, from ProQuest database

IR Magazine Awards (2006). Investor Perception Study Asia 2006/2007. Hong Kong
China: IR Magazine

Hausman, M. (July 12, 2004). Maximize Corporate Value: Tips for successful IPO
communications. Strategic communications Group. Reisterstown, MD: Digital
Harbor Online. Retrieved October 28, 2006, from
http://www.digitalharboronline.com/columns/archive51.html

Clifford, M.L. (August 5, 2002). The Long March Begins; Liu’s Hot IPO at Bank of
China Paves the Way for Further Reform. BusinessWeek, issue 3794, p.44. Retrieved
February 12, 2007, from ProQuest database

MasterCard Worldwide website (2007a). Corporate Overview. Retrieved February 2,
2007, from
http://www.mastercard.com/us/company/en/corporate/index.html

MasterCard Worldwide website (2007b). The MasterCard Story. Retrieved February
2, 2007, from
http://www.mastercard.com/us/company/en/corporate/the_mastercard_story.h
tml

MasterCard Worldwide (May 10, 2005). MasterCard Incorporated Reports Strong
First Quarter Results. Financial News. Retrieved March 2, 2007, from
http://investorrelations.mastercardintl.com/phoenix.zhtml?c=148835&p=irol-
newsArticle&ID=795991&highlight=

MasterCard Worldwide (August 5, 2005). MasterCard Incorporated Reports Strong
Second Quarter Results. Financial News. Retrieved March 2, 2007, from
http://investorrelations.mastercardintl.com/phoenix.zhtml?c=148835&p=irol-
newsArticle&ID=795829&highlight=

MasterCard Worldwide (September 15, 2005). MasterCard Files Registration
Statement for Initial Public Offering. Financial News. Retrieved March 2, 2007,
from
http://investorrelations.mastercardintl.com/phoenix.zhtml?c=148835&p=irol-
newsArticle&ID=794641&highlight=

143
MasterCard Worldwide (November 1, 2005). MasterCard International Reports
Continued Growth in Third Quarter, First Nine Months of 2005. Financial News.
Retrieved March 2, 2007, from
http://investorrelations.mastercardintl.com/phoenix.zhtml?c=148835&p=irol-
newsArticle&ID=794639&highlight=

MasterCard Worldwide (November 3, 2005). MasterCard Incorporated Reports
Third Quarter Results. Financial News. Retrieved March 2, 2007, from
http://investorrelations.mastercardintl.com/phoenix.zhtml?c=148835&p=irol-
newsArticle&ID=794630&highlight=

MasterCard Worldwide (November 28, 2005). MasterCard Shareholders Approve
Proposals for New Ownership and Governance Structure. Financial News. Retrieved
March 2, 2007, from
http://investorrelations.mastercardintl.com/phoenix.zhtml?c=148835&p=irol-
newsArticle&ID=794626&highlight=

MasterCard Worldwide (February 2, 2006). MasterCard International Reports
Double Digit Growth in 2005 as Gross Dollar Volume Increases 11.9% Worldwide.
Financial News. Retrieved March 2, 2007, from
http://investorrelations.mastercardintl.com/phoenix.zhtml?c=148835&p=irol-
newsArticle&ID=812393&highlight=

MasterCard Worldwide (March 16, 2006). MasterCard Incorporated Reports Record
Results for the Year Ended December 31, 2005. Financial News. Retrieved March 2,
2007, from
http://investorrelations.mastercardintl.com/phoenix.zhtml?c=148835&p=irol-
newsArticle&ID=833626&highlight=

MasterCard Worldwide (May 2, 2006). MasterCard Incorporated Reports Record
Net Income for the Quarter Ended March 31, 2006. Financial News. Retrieved
March 2, 2007, from
http://investorrelations.mastercardintl.com/phoenix.zhtml?c=148835&p=irol-
newsArticle&ID=851016&highlight=

MasterCard Worldwide (May 24, 2006). MasterCard Incorporated Prices Initial
Public Offering Company to List on New York Stock Exchange Under Symbol: MA.
Financial News. Retrieved March 2, 2007, from
http://investorrelations.mastercardintl.com/phoenix.zhtml?c=148835&p=irol-
newsArticle&ID=860963&highlight=

Metzker, C. (March 2001). Successful Practices: Media Relations. Investor Relations
Update. Vienna, VA: National Investor Relations Institute (NIRI)

144
Motley Fool, The (2007a). Advertise: Audience & Usage. Retrieved February 20,
2007, from
http://www.fool.com/media/advertising/advertising01.htm

Motley Fool, The (2007b). About The Motley Fool. Retrieved February 20, 2007,
from
http://www.fool.com/press/about.htm

Murphy, J. (June 2, 2006). Agencies Ponder Impact of Revenue Loss on HK’s dailies.
Media, p.12. Retrieved February 12, 2007, from ProQuest database

Nolan, H. (September 12, 2005). MasterCard Taps FD for IPO work. PR Week.
O’Brien, K. (June 28, 2004). Financial Communications in the Public Eye. PR Week
Philippidis, A. (May 22, 2006). Risks Many, But Rewards Priceless in MasterCard
IPO. Westchester County Business Journal, 45:21, p.3(1). White Plains, NY:
Thomson Gale

Pottinger, M. & Stein, P. (July 26, 2002). Bank of China Chief Want to List by 2005:
Hong Kong Unit’s IPO Is Template for Reform Process, Chairman Says in Interview.
The Wall Street Journal, p.A8. Retrieved February 12, 2007, from ProQuest database

Reuters, (2007). Company Overview: Key Facts. Retrieved February 20, 2007, from
http://about.reuters.com/aboutus/overview/facts/index.asp

Schaumann, N.B. (2002). Gilbert Law Summaries Securities Regulation (the 6
th

Edition). New York: Harcourt Legal & Professional

Schultz, S. (February 2003). Driving Shareholder Value through Investor
Communication. Investor Relations Update. Vienna, VA: National Investor
Relations Institute (NIRI)

Securities and Futures Commission (2003). Hong Kong’s Securities Markets—Key
Indicators. Hong Kong, China: SFC. Retrieved November 20, 2006, from
http://www.sfc.hk/sfc/doc/EN/speeches/public/others/speechbook/appendix.p
df

Securities and Futures Commission (2005). Investor Survey on Sponsors. Hong
Kong, China: SFC. Retrieved February 12, 2007, from
http://www.sfc.hk/sfc/doc/EN/speeches/public/surveys/investor_survey_on_s
ponsors_050302.pdf

145
Securities and Futures Commission (2006). SFC Historical Background. Hong Kong,
China: SFC. Retrieved November 20, 2006, from
http://www.sfc.hk/sfc/html/EN/aboutsfc/background/background.html

Securities and Futures Commission (2007). Market and Industry Statistics. Hong
Kong, China: SFC. Retrieved February 12, 2007, from
http://www.sfc.hk/sfc/html/EN/research/stat/stat.html

Taub, S. (December 19, 2006). IPOs at Five-Year High. CFO.com. Retrieved
January 6, 2007, from
http://www.cfo.com/article.cfm/8464945?f=related

Taulli, T. (2001). Investing in IPOs, Version 2.0. New York: Bloomberg Press
Thomson Financial (September 2006). IPO Best Practices. Stamford, CT: Thomson
Financial. Retrieved January 12, 2007, from
http://www.thomsonfinancial.com/docs/IPObestpractices.pdf

Timmons, H. (October 27, 2006). New York Isn’t the World’s Undisputed Financial
Capital. New York Times, p.C1

U.S. Securities and Exchange Commission (April 24, 1978). Prohibition on
Unnecessary Publicity. Securities Act Release, No.14, p.699

U.S. Securities and Exchange Commission (July 19, 2005). Securities Offering
Reform. SEC Release Nos. 228501. Retrieved January 6, 2007, from
http://www.sec.gov/rules/proposed/33-8501.htm

Wall Street Journal Online & Harris Interactive, The (October 27, 2006). Vast
Majority Say the Government Should Take Action to Ensure Americans Have
Enough to Live on in Retirement. Personal-Finance Poll, 2:3. Rochester, NY: Harris
Interactive Press. Retrieved February 10, 2007, from
http://www.harrisinteractive.com/news/newsletters/WSJfinance/HI_WSJ_Per
sFinPoll_2006_vol2_iss07.pdf

Wall Street Journal Asia, The (2007). About The Wall Street Journal Asia. Hong
Kong, China: WSJ Asia. Retrieved February 26, 2007, from
http://www.wsj-asia.com/about_wsja.html

Wall Street Journal, The (2007). Consumer Media Group. Retrieved February 20,
2007, from
http://www.dj.com/Products_Services/PrintPublishing/WSJ.htm

146
Wastler, A. (December 15, 2004). Adieu, CNNfn: Today the Scrappy Little Business
Network, this Web Site’s Sister Operation, Shuts Down. CNNMoney.com. Retrieved
February 20, 2007, from
http://money.cnn.com/2004/12/14/commentary/wastler/wastler/index.htm

Wolff, G. (2001). The Biotech Investor’s Bible. New York: Wiley
White House, The (2002). President Bush Signs Corporate Corruption Bill.
Washington, DC: The White House Press. Retrieved January 6, 2007, from
http://www.whitehouse.gov/news/releases/2002/07/20020730.html

World Federation of Exchange (2006). WFE 2006 Market Highlights. Paris, France:
WFE Statistics. Retrieved January 21, 2007, from
http://www.world-exchanges.org/WFE/home.Asp?nav=ns6

Yang, Y. (2003). Financial Public Relations Strategies before the IPO and after the
IPO in Hong Kong. Sohu.com. Retrieved February 22, 2007, from
http://business.sohu.com/75/21/article211212175.shtml
(Chinese version)

Abstract (if available)

Linked assets

University of Southern California Dissertations and Theses

Conceptually similar

PDF

The role of international PR firms in the use of CSR to achieve harmonious society in mainland China and Hong Kong

PDF

A comparative study of food safety-related public relations practices in China and the United States

PDF

The new ways of corporate communication in virtual environments: case studies of Second Life

PDF

The influence of new media marketing public relations on the South Korean film industry -- in relation to the U.S. film industry

PDF

From the Great wall to the Wall Street: Investor relations strategies for US-listed traditional Chinese medicine manufacturers

PDF

A comparison of corporate PR practices in U.S. and China: a case study approach

PDF

The convergence of investor relations and public relations: fitting investor relations into the overall corporate communications strategy

PDF

The evolution of the internal communications practice and its importance to the survival of organizations

PDF

Case study on Chinese heavy industry companies' community relations in U.S.: a comparison between corporate effort and media representation

PDF

A study of social media practices and trends in the field of investor relations

PDF

Tailoring pharmaceutical public relations strategies to different markets: a case study of the launching strategies of Gardasil in the U.S. and China

PDF

Strategic communication in the fight against HIV/AIDS in the Russian Federation

PDF

Cultural, organizational, and communicational factors affecting the social marketing campaigns for a non-governmental organization to establish a successful presence in China

PDF

The implementation of corporate social responsibility initiatives as a strategy for post-crisis rebuilding and renewal

PDF

Web 2.0: An examination of its effects upon U.S. public relations practices

PDF

The civic responsibility of professional sports teams: Exploring the role of a team in its community

PDF

A comparative analysis of the advertising and public relations disciplines in an era of digitally fueled audience control

PDF

Spaces of market-culturalism: the case of Chungking Mansions, Hong Kong

PDF

Facebook and the ideal social marketplace: a study of the marketing benefits of social media practices

PDF

Social media best practices for communication professionals through the lens of the fashion industry

Asset Metadata

Creator Tai, Shu-Fen (author)

Core Title A study and comparison of the IPO communications environments and communications strategies in the U.S. and Hong Kong

School Annenberg School for Communication

Degree Master of Arts

Degree Program Strategic Public Relations

Publication Date 04/14/2009

Defense Date 04/02/2007

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag IPO publicity,OAI-PMH Harvest

Language English

Advisor Swerling, Gerald (committee chair), Campbell, Shannon (committee member), Chen, Baizhu (committee member)

Creator Email shufenta@usc.edu

Permanent Link (DOI) https://doi.org/10.25549/usctheses-m391

Unique identifier UC1437584

Identifier etd-Tai-20070414 (filename),usctheses-m40 (legacy collection record id),usctheses-c127-327793 (legacy record id),usctheses-m391 (legacy record id)

Legacy Identifier etd-Tai-20070414.pdf

Dmrecord 327793

Document Type Thesis

Rights Tai, Shu-Fen

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Repository Name Libraries, University of Southern California

Repository Location Los Angeles, California

Repository Email cisadmin@lib.usc.edu