For public and pre-IPO companies, consistency in investor-facing communication is more than just optics. It is a strategic and legal necessity. When messages diverge across earnings calls, press releases, and SEC filings, companies risk more than confusion—they invite scrutiny, diminish trust, and create compliance issues.
Inconsistent messaging has become a common yet costly error. As Newsfile warns, conflicting tones between press releases and filings can turn key points in announcements into noise and even damage a company’s credibility. And under Regulation Fair Disclosure (Reg FD), selective or contradictory disclosures can lead to SEC scrutiny and even enforcement actions.
What Is Narrative Inconsistency in Investor Communications?
Narrative inconsistency occurs when a company presents conflicting versions of its business outlook, risks, or performance across different platforms. It could be a rosy press release, a cautious MD&A and a CEO interview that downplays challenges—all describing the same quarter.
Tone, language, and substance should align across:
- MD&A sections in SEC filings
- Earnings calls and transcripts
- Executive interviews and speeches
- Investor presentations and marketing materials
Even small discrepancies can raise red flags. A company may downplay supply chain risks in one disclosure while highlighting mitigation strategies in another, only for investors to later discover that the issue was material.
Some inconsistencies are inadvertent. For example, copying outdated figures into a new disclosure or missing a legal review may seem minor, but regulators view these as serious compliance failures. As Newsfile notes, even a typo in a financial figure can “destroy the credibility of your entire message.”
Use of Non-GAAP Measures
The use of non-GAAP measures of operating performance can also give rise to conflicting narratives. Non-GAAP metrics such as “adjusted EBITDA” or “gross operating margin” often exclude non-cash expenses or include undefined adjustments in an effort to depict a company’s true operating performance.
While these measures can be very useful, they are not concepts that are uniformly applied the way GAAP is. (That’s what makes GAAP, well, GAAP.)
For example, one company’s “adjusted EBITDA” measure, announced without explanation, may exclude expenses that another company included within their “adjusted EBITDA.” This factor makes non-GAAP measures less useful when comparing the performance of multiple companies side by side.
SEC Guidelines generally require that:
- Non-GAAP measures not be given more prominence than GAAP information and
- That the assumptions underlying non-GAAP measures be disclosed and reconciled with GAAP.
Where GAAP disclosure and non-GAAP measures show very different operating results, an effort should be made by the company to explain the differences.
For example, if GAAP results show a loss because substantial depreciation of equipment was included (a non-cash item) but adjusted EBITDA showed an operating profit because it did not include the depreciation expense, the difference begs for a narrative explanation.
Our advice in a situation like this would be not to downplay the GAAP results, but rather to:
- Give both measures at least equal prominence and
- If appropriate, explain the impact of GAAP-required depreciation and how it is being managed.
Apart from regulatory requirements, failure to do so creates an inconsistent presentation, which may result in a loss of credibility.
Consistent Core Messages
We see many examples of companies whose press releases feel disjointed. The most common problem is that the company focuses on the immediate key development or announcement that is the driver of the press release without giving thought to how the information fits within the broader narrative of the company’s core messaging.
At the core of every company’s public-facing image is a story:
- Why the company is different
- Why it will succeed
- What makes the company special
If the immediate development that gives rise to the press release can be couched or related to the company’s core messaging, the announcement then fits more comfortably within the continuum of press releases, disclosures, and announcements by the company.
Ultimately, the story that this body of information tells over time will be the thing that sticks in the minds of investors and analysts. When a company fails to tell a story, the market forms its own story or, more likely, discounts or ignores the disjointed information.
Why It Matters: Legal, Compliance, and Governance Risks
Narrative inconsistency presents real legal risk. Under SEC rules, public companies must ensure that material information is shared broadly and simultaneously. Misalignments between disclosures can suggest selective transparency.
Shareholder litigation is also a concern. If contradictory messaging leads to financial harm or misleads the market, plaintiffs may argue that the company failed to meet its disclosure obligations. Courts have looked unfavorably on governance structures that permit inconsistencies in material disclosures.
Common Causes of Inconsistent Messaging
Some of the most common causes of narrative inconsistency include:
- Departmental silos: Legal, IR, PR, and marketing teams often operate in parallel, without centralized message coordination.
- Overly aggressive spin: Marketing teams may emphasize growth or downplay risk in ways that conflict with the tone of regulatory filings.
- Timing mismatches: If a press release precedes an MD&A or 10-Q, the narrative may appear out of sync or misleading without full context.
- Lack of coordinated review: Without a formal messaging review process, inconsistencies in tone, terminology, and framing can go unnoticed.
These gaps introduce risk not only to regulatory compliance, but to the company’s broader investor messaging strategy.
Strategic & Legal Fixes
- Align cross-functional teams through messaging briefs. Legal, IR, and communications teams should collaborate on key talking points before major announcements. Shared internal briefs reduce the risk of mixed messaging.
- Ensure legal review of all public statements. All press releases, investor presentations, and executive quotes should be reviewed for alignment with regulatory filings. This step is essential for press release compliance and regulatory accuracy.
- Coordinate timing across disclosure channels. Public remarks, earnings guidance, and regulatory filings should be synchronized to avoid discrepancies or selective disclosure.
- Train executives to maintain narrative alignment. Executives should understand the legal and reputational implications of inconsistent commentary—whether on earnings calls or in the media.
- Balance tone to reflect both risks and opportunities. Investors expect candor. Emphasizing only the positive undermines trust, while acknowledging challenges demonstrates transparency.
Complexity for Diversified or Cross-Border Businesses
For companies operating in multiple markets or with dual listings, narrative alignment is even more challenging. Canadian businesses operating in the U.S., for example, must comply with both Canadian Securities Administrators disclosure rules and U.S. requirements under the SEC.
Discrepancies between disclosures in different jurisdictions can dilute your message and raise cross-border enforcement issues. Maintaining consistent disclosures across borders is a key element of modern securities compliance.
Conclusion: Alignment as a Governance Best Practice
Narrative inconsistency isn’t just a communications flaw—it signals breakdowns in oversight, introduces legal exposure, and weakens market confidence. Perhaps just as importantly, narrative inconsistency fails to contribute to the company’s core messaging. The story is not reinforced. It may even be diluted. Narrative consistency that ties to the core messaging, on the other hand, does more than communicate data. It builds the story that defines the company in the eyes of the investing public.
Integrated legal, financial, and communications planning and coordination are essential to any effective investor messaging strategy. With proactive review and coordinated disclosures, companies can reduce risk, strengthen credibility, and build long-term investor confidence.