How small cap firms get good news out to investors



Temps de lecture

4 min


Companies with a smaller market capitalization have a tougher time getting investors’ attention, since they lack the communications muscle of bigger firms and don’t get much coverage from analysts or the business press. So instead, as a new study reveals, they pick their shots to make the most of their limited resources, opportunistically utilizing conference calls, press releases and social media to get the word out about positive earnings.

Based upon an interview with Andrei FILIP, a Professor at IÉSEG School of Management, and his paper, “Grabbing Investor Attention with Limited Resources: A Study of Small Cap Firms’ Communication Channels,” co-written with Romain Boulland of ESSEC Business School, Alessandro Ghio of Universite Laval and Luc Paugam of HEC Paris, published in European Accounting Review in August 2023.

The communication challenges of small cap firms

Small cap firms can present a potentially lucrative opportunity for investors to make a bigger-than-usual return for their money, provided that they’re willing to accept higher risk. The problem for those  companies is that they tend to have a tougher time getting investors’ attention, as IÉSEG Professor Andrei FILIP explains.

“They’re not large, famous firms that everybody’s talking about, the ones that have unlimited resources to communicate with the world,” FILIP says.

When big-name companies have an earnings report to publicize, they can call upon armies of publicists to issue press releases, and then hold conference calls that have little trouble attracting analysts and business reporters. They can amplify those messages across social media as well.

Small-cap firms, in contrast, have a more difficult time affording the cost of investing in multiple communication channels, according to FILIP. So they have to be much more selective.

“These firms need to grab the investors’ attention, because they don’t have the same visibility as big firms that are covered by the news media,” FILIP says. Additionally, the small firms don’t have the luxury of having media specialists create a compelling story for them. Instead, “accounting information is more relevant, because it’s one of the main sources of information about what’s happening in the company,” FILIP says. “It’s much more important, compared to big firms.”

In addition to traditional channels, small cap firms started using social media as an effective communication channel

In their study, FILIP and his colleagues focused on firms listed on the Alternative Investment Market (AIM), a part of the London Stock Exchange, over a five-year period between 2010 and 2015. At the end of that period, AIM included 1,044 micro to small cap firms, with an average market capitalization of 73 million British Pounds.

“The AIM represents one of the largest small cap markets in the world, making it a good setting to study the communication strategies of firms with limited resources,” the researchers wrote in the paper. AIM firms are followed, on average, by less than one analyst, and the exchange’s “Wild West” reputation creates a fertile ground for communication innovation.

The researchers focused on how firms publicized earnings announcements, which frequently affect stock prices because reported earnings are central to investors. 

In the study, they asked three major questions. Do firms use the three communication channels (press release, conference call, social media)? (Yes, infrequently). Do they use all the channels opportunistically? (Yes.) Finally, is it working? i.e. do small cap firms attract the attention of the investors? (Yes.)

The study found that when it came to publicizing earnings, these firms use conference calls, press releases, and social media posts—to a limited, infrequent extent. In the period 2010-2015, small cap firms held conference calls 10.1 percent of the time to promote earnings news, and issued press releases ahead of earnings announcements 13.9 percent of the time. In comparison, they issued an attention-grabbing tweet 4.7 percent of the time.

Why small cap firms used social media

The study suggested that small cap firms use social media, and that it has some benefits for them. For cost-cautious companies, it provides a way to reach out for free. “With the appearance of platforms such as Twitter, Facebook and others, things have changed, because firms have a cheap way of communicating directly with investors,” explains FILIP, intrigued by the question of whether the new platforms affect the way that companies communicate with investors.

Additionally, there are indications that a good Tweet or post on another platform can have an outsized impact.

“We notice that firms that use social media are having a higher number of Google searches,” FILIP says. “People are searching more for the name of the company, what the company is about. So I think it is working,  in the sense that the small cap firms manage to grab investors attention.” For small cap companies, who can’t necessarily afford to hire an investor relations specialist to communicate with investors, it’s a way of getting a result for less cost.

Practical Applications: 

Companies can research on the impact of various communication channels, and incorporate that information into their investor communication strategy to make it more effective.


The researchers studied 1,044 small cap firms listed on the AIM London stock exchange during the period 2010-2015. They then collected data on conference calls by utilizing Refinitiv Eikon, a business information service, and corporate websites. They obtained press releases for that period from RavenPack, a database that includes articles published in newspapers and wire services. Finally, they manually compiled the Twitter account names of all the firms included in the study, and extracted the entire Twitter activity of the firms.

Category (ies)

Economics & Finance


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