The “political changes” question in emerging markets

A question that often comes up in investor conference calls, especially with emerging markets companies, is “How are political or regulatory changes affecting the business environment?”

The way your company chooses to answer this question is a stylistic difference. There is rarely a right or wrong.

There will be some companies who have the CEO answer that question, and there will be some companies who have the CFO or one of the other officers of the company answering it.

Again, both styles are completely valid, but one thing to keep in mind is how they affect the deep bench question.

If the CEO answers the question, the CEO’s answer might be very knowledgeable, but the audience might wonder, “Is the CEO the only one who understands and knows how to deal with this issue, or do the other officers understand it and know how to deal with it, too?”

On the other hand, if the answer is given by one of the other officers, then it answers the deep bench question well. It shows that the other officers of the company understand the political changes and what they will mean for the company.

However, it might leave the audience wondering how well the CEO understands how the political environment is affecting the business.

One other thing to watch out for is if you have the chief legal officer answering regulatory questions, the answer might be the most accurate, but the listeners might start thinking, “Is the chief legal officer the only one who understands this, or does the bench understanding run deeper?”

Again, like most things related to investor conference calls, there is no right or wrong answer. It’s largely a stylistic question. The thing to keep in mind is that no matter what method you choose, it will raise questions in the audience’s minds, and you need to come up with a game plan for addressing those questions.

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