How Credibility, Clarity and Consistency Shape Investor Perception and the Cost of Equity

In collaboration with the Association for Investor Relations (NIRI), Rose & Company hosted a discussion on how external perception can be a key driver of equity valuation. To understand how that perception forms, we spoke with senior long-only portfolio managers from leading U.S. asset managers. The insights below highlight the key takeaways from the conversation.

Credibility is central to how investors perceive risk and value equities

Credibility forms early, through candor and openness, and strengthens over time as companies communicate consistently, address difficult topics directly, and help investors distinguish short-term fluctuations from structural shifts. When investors trust the people running the business, they model the future with more confidence, which lowers the perceived risk discount embedded in the equity.

“Candor is really appreciated. That first engagement is about trust.”

“It’s how you handle the bad quarters — that’s where you really learn about a relationship.”

Investors want companies to set the metrics and the terms of evaluation

When management says, “Here is the business we’re in, here is how we create value, and here are the measures that actually matter,” it gives investors a clear reference point. It also helps prevent the market from fixating on the wrong signals (short-term EPS, quarterly noise, or just the share price) instead of the real drivers: returns on capital, free cash flow, margin resilience, and disciplined capital allocation.

Done well, this is not about cheerleading the stock. It’s about leading with the commercial reality of the business, then explicitly linking that to how the equity should be evaluated over years, not quarters.

“Tell us the metrics you want to be judged by, and how we can tell if you’re doing a good job.”

“Management should help guide shareholders toward their idea of intrinsic value.”

“Too much focus on the stock price can be off-putting.”

Long-term guidance anchors valuation and clarifies strategic durability

Long-term guidance helps investors assess the endurance of competitive advantage — a core driver of valuation. Even directional guidance offers a critical anchor for modeling return persistence and separating timing issues from structural trends. It gives shape to the long-term investment case and reduces uncertainty in forecasting.

“It gives us an anchor — one baseline we can use to assess how long the advantages will last.”

“Part of that is the long-term guide helps you say, oh, this company thinks it can maintain its set of competitive advantages for the next 3–5 years.”

“It ends up being a valuable baseline from which to do analysis.”

When expectations shift, your explanation matters as much as the results

Investors can process volatility and short-term fluctuations — what they value most is a clear, direct explanation of why expectations are changing and what management is seeing ahead. IR plays a pivotal role in framing these moments, so investors understand the difference between short-term noise and long-term fundamentals.

“You should just say it — and then explain the momentum you’re starting to see.”

“Bad news is bad news, but it doesn’t have to be terrible if investors understand the offsets.”

“When we don’t hear about something we know is a hot topic… that leads to the impression that management is missing something.”

Conviction builds over time through repeated, consistent interactions

Long-only investors rarely move after one meeting. Their conviction forms over a series of touchpoints—often around three substantive interactions—where each meeting adds a new layer: first to understand the business, then to test assumptions in the model, and finally to confirm durability and alignment in how management thinks. Because they hold positions for years, long-only investors look for consistency across these conversations. A steady narrative and clear through-line across meetings make it easier for them to build confidence in the story.

“I’m going to be in the stock for a while. Credibility and candor are what we look for.”

“Each interaction fills in part of the picture. It becomes a multi-quarter relationship.”

About Rose & Company

Rose & Company is a leading independent capital markets advisory firm offering strategic counsel and tailored solutions to help companies increase market valuation. Serving a broad range of companies across industries and geographies, we employ a forward-thinking approach to investor engagement and acquisition, leveraging our significant experience and our broad relationships within the investment community. We align our interests with those of our clients and focus on creating long-term value by identifying, engaging, and building relationships with high-quality, long-term investors.