Investor relations: conference call, web usage grow.

Companies anxious to build or restore investor trust are increasingly turning to conference calls, according to an Massachusetts Institute of Technology Sloan School of Management professor whose research also finds increased share values for firms that use such interactive communication. And, more and more of those calls are taking place online, rather than by phone.

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"Conference calls and webcasts can allay the suspicion of investors," says Associate Professor Kin Lo. "If management is willing to do conference calls, investors can better detect whether management is being fully forthcoming and will feel less uncertainty about the company. But if you are reluctant to be interactive, investors may infer that you are hiding something."

According to Lo, the Internet is rapidly displacing the telephone as the primary vehicle for interactive communications with investors. Webcasts now total more than 5,000 a quarter, Lo notes; even by the end of 2002, more than 90 percent of company-investor conferences were conducted online, compared to about 50 percent as recently as 1999.

Smaller investors also stand to directly gain from this increase in interactive communication. "When a company holds one of these calls, it's essentially leveling the playing field between big and sophisticated investors and small investors," says Lo. "A company that is open and uses calls and webcasts to directly provide information to investors reduces this discrepancy."