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The Eurozone Crisis and Investor Confidence

As Greece, Spain and Ireland have received modestly positive grades from investors in the past couple of months, analysts have determined the eurozone is seeing fragile stability.

In October, Standard & Poor's raised Greece's rating to a B- from a three-month slew of Cs, The Wall Street Journal reports. Because an exit from the eurozone could lead to economic slumps across Europe, Greek decision makers' steadfast grip on the euro has given investors some hope.

Meanwhile, credit ratings service Moody's has deemed the European Central Bank's Outright Monetary Transactions program a positive point and have increased Spain's ratings, states WSJ.

Despite these optimistic overviews, many investors and company leaders are still holding their breaths, remaining extremely cautious of the region's crisis and how the region's markets affect global transactions.

Stability is a Priority
Eurozone issues are the top concern for the majority of companies in Western Europe and rank among the biggest fears of North American firms, according to a recent study by financial services provider BNY Mellon.

"Global Trends in Investor Relations" examined the issues facing publicly traded companies and how they are managing investor relations. Among 800 companies across 59 countries and a variety of industries, 76 percent of respondents said eurozone stability has the largest impact on global market confidence.

"Issues like the eurozone and 'fiscal cliff' continue to weigh heavily on markets globally," Christopher Kearns, deputy CEO of BNY Mellon's Depositary Receipts, said. "In response to these challenges, we're seeing more firms seeking to boost their international shareholders."

Modifying Investor Relations
Increasing the number of international investors is a priority for 33 percent of companies globally. The dedication to this goal has grown in recent years from 20 percent in 2011 and 17 percent in 2010. Western Europe is most interested in gaining more global shareholders, followed by the Middle East, Eastern Europe and Africa.

Current shareholders are getting more attention too. More than one-quarter of firms plan to focus more time and attention on their existing investors.

"As global capital markets move into 2013, the imperative for companies to maintain an active, engaged investor relations program has never been greater," said Guy Gresham, a BNY Mellon division head.

The Growing Influence of Shareholders
Faced with persistent economic turbulence globally, the function of investor relations is growing more prominent at the highest levels of company management, the study reports. Organizations are contributing more analysis to their boards and more IROs are presenting more frequently at board meetings.

Investor relations and corporate governance are increasingly becoming more tightly woven, BNY Mellon notes. Nearly 80 percent of corporations have written disclosure policies in place and half have crisis communications programs.

In addition, a slight but significant amount of companies are incorporating social media into their relationships with investors. In 2010, only 9 percent used some form of social media to communicate with shareholders. That number has increased to 26 percent in 2012.

While these numbers are laughable when compared to the social media interactions businesses have with consumers and clients, BNY Mellon reports the demand for networking among investors just isn't very strong. Yet.

If Europe loses its balance, will corporate investors bail?