Investor relations

Source: Wikipedia, the free encyclopedia.
See also: Public relations

Investor relations (IR) is a "strategic management responsibility that is capable of integrating

securities law compliance to enable the most effective two-way communication between a company, the financial community, and other constituencies, which ultimately contributes to a company's securities achieving fair valuation." as defined by National Investor Relations Institute (NIRI).[1] IR is also function to assess the impact of a company actions (e.g. acquisitions, change in dividend policy, introduction of new product) on the company's position in the capital markets (e.g. stock price, competitive position, public perception).[2]

The term describes the department of a company devoted to handling inquiries from shareholders and investors, as well as others who might be interested in a company's stock or financial stability.

Structure

Typically investor relations is a department or person reporting to the

corporate communications departments, and can also be referred to as "financial public relations" or "financial communications." In smaller companies, the IR function is often outsourced to independent investor relations firms. Investor relations is considered a specialty of public relations by the U.S. Department of Labor.[3]

Many larger publicly traded companies now have dedicated IR officers (IROs), who oversee most aspects of

annual reports. The investor relations function also often includes the transmission of information relating to intangible values such as the company's policy on corporate governance or corporate social responsibility. Recently, the field has trended toward an increasingly popular movement for "interactive data", and the management of company filings through streaming-data solutions such as XBRL
or other forms of electronic disclosure have become prevalent topics of discussion amongst leading IROs worldwide.

The investor relations function must be aware of current and upcoming issues that an organization or issuer may face, particularly those that relate to fiduciary duty and organizational impact. In particular, it must be able to assess the various patterns of stock-trading that a public company may experience, often as the result of a public disclosure (or any research reports issued by

Corporate Secretary
on legal and regulatory matters that affect shareholders.

While most IROs would report to the chief financial officer, they will also usually report to the chief executive officer (CEO) and board of directors and/or president of the corporation. This means that as well as being able to understand and communicate the company's financial strategy, they are also able to communicate the broader strategic direction of the corporation and ensure that the image of the corporation is maintained in a cohesive fashion.

The president or CEO of the company or corporation would have direct responsibility in relating the company's overall posture directly to the shareholders or the investors.[4]

Due to the potential impact of legal liability claims awarded by courts, and the consequential impact on the company's share price, IR often has a role in

industrial disasters
.

The most highly regarded professional member organization for investor relations in the United States is the National Investor Relations Institute, or NIRI. In addition to numerous professional development seminars and meetings, NIRI offers a certification program, the Investor Relations Charter.[5] In the United Kingdom, the recognized industry body is The Investor Relations Society, while in Canada, the professional association is called the Canadian Investor Relations Institute, or CIRI. Australia's professional organization is known as the Australian Investor Relations Association (AIRA).

The Sarbanes–Oxley Act

The

MiFID
Directive, although principally concerned with investor protection, also covers regulation and compliance for listed European companies.

References

  1. ^ "Standards of Practice for Investor Relations" (PDF). National Investor Relations Institute (NIRI). p. 2. Archived from the original (PDF) on 6 February 2023. Retrieved 6 February 2023.
  2. ISBN 9780471708520
    . Retrieved 6 February 2023.
  3. ^ "Public Relations Specialists". Occupational Outlook Handbook, 2010-11 Edition. U.S. Bureau of Labor Statistics. Archived from the original on Jan 18, 2012.
  4. ^ "Navigating Multi-Channel Digital Strategies for Investor Relations". TFM. Retrieved 2024-03-16.
  5. ^ "IRC Certification FAQs". NIRI. Retrieved 2018-06-28.
  6. ISBN 1-57660-135-8
    .

External links
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