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Sunday, December 2, 2012

How Infosys foresaw investor risk from negative media

While going through the 20F of Infosys(form for submitting annual report to USA investors), I noticed the following risk factor below, which is self explanatory. 
Negative media coverage and public scrutiny may adversely affect the prices of our equity shares and ADSs.
Media coverage and public scrutiny of our business practices, policies and actions has increased dramatically over the past several years, particularly through the use of Internet forums and blogs. Any negative media coverage in relation to our business, regardless of  the factual basis for the assertions being made, may adversely impact our reputation. Responding to allegations made in the media may be time consuming and could divert the time and attention of our senior management from our business. Any unfavorable publicity may also adversely impact investor confidence and result in sales of our equity shares and ADSs, which may lead to a decline in the share price of
our equity shares and our ADSs.

What is remarkable is that this risk factor has been around in Infy's 20F even earlier. I went through the 20F's for FY10-12, and this risk factor was present. Given that the controversy over Veritas's releasing research reports online, the surge in critical bloggers and journalists, this prescience is quite admirable and reflects the fact that they are quite cautious. Maybe other companies should take note.