“Investor Relations encompasses the broad range of activities through which a quoted company communicates with its current and potential investors.”
London Stock Exchange
A Practical Guide to Investor Relations
“Enhancing corporate value through effective communication.”
Investor Relations Society
This process is achieved through a two-way communications process:
- Giving the market an accurate picture of a company's performance and prospects; and
- Gaining feedback from the market to assist with planning and delivering strategy.
If a company's investor relations programme is successful, the result for the company should be:
- a fair market valuation for the company;
- a reasonable level of liquidity in shares;
- access to further capital.
“The constantly evolving requirements of disclosure, transparency and corporate governance create significant challenges for all quoted companies. IR practitioners, whether they work in-house or in an advisory capacity, have a vital role to play in helping companies to manage these issues and to communicate more effectively with the investment community.”
Diane Faulks,
Client Director, Cantos Communications
Managing expectations
The share price of the company is a result of the market's expectations of future performance of the company. This expectation results from many sources, such as analyst forecasts, company's statements, press reports and sector performance. Managing these expectations so that they do not diverge significantly from reality is a very important aspect of investor relations.
The groups that Investor Relations Officers (IROs) need to target include:
- Institutional investors;
- Investment analysts;
- Private shareholders;
- Lenders;
- Employees.
But other stakeholders such as the media are also important in ensuring that markets are kept in touch with developments and events, which may influence the share price.
Investor Relations Officers need to communicate:
- Quality of management;
- Performance;
- Financial;
- Market;
- Strategy:
- Past Achievement;
- Future;
- Growth predictions.
They achieve this communication via company visits, roadshows, annual reports, one-to-one meetings, AGMs, written statements and the company website.
Investor Relations Officers can call on a number of resources to bolster their in-house investor relations efforts including:
Financial PR firms - to manage relationships with journalists and analysts, and to provide companies with feedback of opinion;
Corporate Brokers - the company's main interface with the market, providing the market with information on the company and also feedback to the company of the market's view of its stock. Corporate brokers manage contact with institutional investors and ensure compliance with listing rules.
Further reading
Download PDF: An Introduction to Investor Relations (members only)
Download PDF: A Practical Guide to Investor Relations
