Attracting Long-Term Investors Through Integrated Thinking and Reporting: A Clinical Study of a Biopharmaceutical Company

• Published in: Journal of Applied Corporate Finance 2014-06, Vol.26 (2), p.57-64
• Main Authors: Knauer, Andrew, Serafeim, George
• Format: Article
• Language: English
• Subjects: Case studies; Commitments; Investors; Pharmaceutical industry; Strategic management; Sustainability reporting
• ISSN: 1078-1196; 1936-8216; 1745-6622
• DOI: 10.1111/jacf.12067

Faced with a large percentage of investors that chase short‐term returns, companies could benefit by attracting investors with longer‐term horizons and incentives that are more consistent with the long‐term strategy of the company. The managers of most companies take their investor base as a “given” that cannot be changed through their actions or words. Using the case of Shire, a biopharmaceutical company with a strong commitment to the goals of improving the safety of its products and the reliability of its supply chain, the authors of this article suggest that companies have the ability and the means to change their investor base in ways that are consistent with their strategy. One of the most promising ways of attracting such investors is integrated reporting, which provides companies with a means of credibly communicating the commitment of its top leadership to diffusing integrated thinking across the organization and to building strong relationships with important external stakeholders. In the case of Shire, both a commitment to integrated thinking and the adoption of integrated reporting appear to have helped the company attract longer‐term investors, which in turn has strengthened management's confidence to carry out its strategy of stakeholder engagement and investment.