Quantified: The Link between News and Share Price Movement

London, Thursday 18 February 2010: Hill & Knowlton (H&K), in partnership with Commetric, today launches Equity Prioritiser, a groundbreaking new service which for the first time enables companies to understand and quantify how media coverage affects share price.

Launching the new service, H&K EMEA CEO Sally Costerton said: “Equity Prioritiser re-writes the rules for managing and measuring corporation reputation. Its secret lies not in the link between media sentiment and share price movement - but in the fact that it is quantifiable. For the first time CEOs, CFOs, IR teams and communication directors can make more informed, collective decisions on how announcements and coverage are likely to affect stock prices. The data quantify how the importance of key reputational drivers change over time and differ between sectors.”

Chris Shaw, Commetric CEO, added: “This EMEA-wide service is based on a unique set of reputation drivers which track all types of material corporate news. Since our processes are automatic, objective, consistent and fast (20,000 articles per minute), we can ensure that the reputation model we map against the stock price benchmarks is comprehensive and statistically robust.”

Developed by natural language scientists, programmers, mathematicians and statisticians over a period of five years, Equity Prioritiser isolates from other variables how much - and in which direction - share price has or is likely to move following media coverage on any one of 350 identified drivers - which are all grouped under broad corporate reputation headings.

The service also:
· facilitates higher strategic collaboration between the C-suite and the PR function
· enables a more sophisticated, scientific approach towards strategic communications planning
· helps determine which debates to get involved in and where competitive advantage lies.

The data, which are strong enough to use as a trading platform for a fund, also reveal that news coverage on lay-offs, pricing, product sales, employee relations and other topics can often be more influential on a company’s share price than a normal quarterly financial announcement or M&A news. Current insights from the sector adjusted data include:-

Not all CEO statements are created equal: Factoring out background volatility over the period, CEO statements in the pharmaceutical sector are associated with positive stock price movement (20 basis points); in the banking sector they were associated with negative movement (66 bps); and in the technology sector they were associated with negative movement (84 bps on days with high coverage of CEO statements).

Quantifying the impact of coverage on cost cutting: Overall, large cap stocks were twice as sensitive to news of ‘cost-cutting’ in 2009, compared with 2007. This trend was highly pronounced in the tech industry where it brought about 172 bps higher volatility for the stocks compared to their usual price movement. Sensitivity to news of ‘product launches’ was associated with a sharper decline over the same period.

Banking stocks in the spotlight: Big banking stocks were 300% more sensitive to coverage on ‘company asset sales’ and lay-offs’ in 2009 than in 2007. News coverage of ‘nationalisation’ in 2009 created 500 bps more volatility to the stocks, compared to their usual level of fluctuation. The data also show the stock much more sensitive to the issue of ‘dividends’ between 2007 and 2009 for the global banks. In 2007, the movement on the issue was just 23 bps; by 2009 media coverage of the issue was associated with 273 bps higher volatility.

“Corporate reputation research is badly in need of fresh and challenging thinking. This service is not the ‘grand unified theory’ of corporate reputation, but it does represent a significant innovation that will improve the influence of corporate reputation professionals in the board room”, said Stuart Smith, Head of H&K’s Corporate Practice across EMEA. He continued: “We have already seen a positive response from a number of companies with which we have been piloting the service.”
 
To see a live demonstration of Equity Prioritiser in action, please visit: www.hillandknowlton.com/emea/ep  
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For further information contact:
Poppy Nagra
Global PR Manager
Hill & Knowlton
Tel: +44 207 413 3021
Mob: +44 7956 169209
Email: pnagra@hillandknowlton.com

Notes to Editors:

About Hill & Knowlton
Hill & Knowlton, Inc. is a leading international communications consultancy, providing services to local, multinational and global clients. The firm is headquartered in New York, with 79 offices in 44 countries, as well as an extensive associate network. The agency is part of WPP, one of the world's largest communications services groups.

About Commetric
Commetric is an independent media research and technology company delivering advanced solutions for corporate analytics. Our technologies process millions of media articles and billions of share price movements to quantify the impact of business activities and the effectiveness of communications strategies. We have 60 experts in media relations, statistics, mathematics and technology since 2005, we have completed over 500 engagements with Fortune 1000 companies. Our leadership team is drawn from Reuters, Dow Jones, Accenture and Hill & Knowlton.

For further information www.commetric.com