The term “investor relations” describes the department of a company that’s dedicated to handling inquiries from shareholders, investors and others who are interested in the company’s stock or financial stability.
Investor relations integrates finance, communication marketing and securities law compliance to allow the most effective two-way communication between a company, the financial community and other groups. In due course, the work of the investor relations department contributes to a company’s securities achieving fair valuation.
The Importance of Investor Relations
Because investors play a major role in the success and growth of a company, it is very important for companies to maintain a strong and transparent relationship with them.
Investor relations oversees the flow of information between a public company, its investors and its stakeholders.
The Goals of Investor Relations
The main goals of an investor relations professional is:
- To enable a company to achieve the best share price that reflects its fundamental value
- To represent the company to investors and represent investors to the company
- To provide financial information to investors in a timely and accurate way
- To provide non-financial information to support company valuations
- To observe the rules of securities commissions and stock exchanges
- To avoid aggressive sales promotion
- To present investor feedback to the company’s management and board of directors
- To build receptive capital markets for future financing at favourable terms
The Roles of Investor Relations
Many large, publicly traded companies have dedicated investor relations officers to oversee most aspects of:
- Shareholder meetings
- Press conferences
- Private meetings with investors (one-on-one briefings)
- The sections of the company website to do with investor relations
- Annual reports
Communicating Company Values
Another function of investor relations often includes the communication of information relating to the company’s values, such as its policy on corporate governance or corporate social responsibility.
Investor Relations’ Role in Crisis Management
Also, equity investor relations often has a role in crisis management. In cases of corporate downsizing, changes in management or internal structure, product liability issues and industrial disasters, there is a potential for legal liability claims and the consequent impact these incidents may have on the company’s share price.
We Are Experts
When we handle a company’s investor relations, we will stay aware of current and upcoming issues that it may face, in particular, the ones that relate to fiduciary duty and have an organizational effect.
We are able to assess the various patterns of stock-trading that a public company may experience. These patterns often result from a public disclosure or research reports issued by financial analysts. We will also work closely with the corporate secretary on legal and regulatory concerns that affect shareholders.
In addition to reporting to the chief financial officer, we will usually also report to the chief executive officer and the board of directors and/or the president. As well as being able to understand and communicate the company’s financial strategy, we can also communicate the broader strategic direction of the company and ensure that the corporate image is consistently maintained.