Corporate actions are integral to capital markets’ day-to-day operations, facilitating dividends, mergers, stock buybacks, and other processes that underpin corporate governance and capital allocation.
However, communicating corporate actions to shareholders is plagued by costly errors, resource-intensive and duplicated practices, and unnecessary complexity as they are passed from issuers down a chain of various intermediaries, largely because they lack a verifiable structured data output that serves as a single source of truth for all market participants.
Corporate actions consist of any event or activity taken by a publicly traded company that may have a material impact on its capital structure or financial position, which needs to be shared with investors, asset managers, and other stakeholders. In the US alone, there are over 3.7 million event announcements every year.
While corporate actions include a wide variety of events, they are typically grouped into three categories based on shareholder participation:
These events dictate the governance of the world’s largest corporations and the flows of trillions in capital, making them fundamental to the modern market economy and efficient capital allocation.
The average cost of operating a regional corporate action unit is $3-5 million.
Inefficiencies in corporate action processing are costing each market participant $3-5 million a year on average, according to a survey by The ValueExchange with the support of ISSA, and potentially hundreds of millions at a corporate level. A key reason for the costly inefficiencies is that 46% of event data is processed manually.