Investor Relations is a strategic management responsibility that is
capable of integrating finance, communication, marketing and 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. 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. Typically investor relations is a
department or person reporting to the Chief Financial Officer or Treasurer. In
some companies, investor relations is managed by the public relations or
corporate communications departments, and can also be referred to as
"financial public relations" or "financial communications." Investor
relations is considered a specialty of public relations by the U.S. Department
of Labor. Many larger publicly traded companies
now have dedicated IR officers, who oversee most aspects of shareholder
meetings, press conferences, private meetings with investors,, investor
relations sections of company websites, and company 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. The investor relations department must also
work closely with the Corporate Secretary on legal and regulatory
matters that affect shareholders. While most IROs would report to the
Chief Financial Officer, they will usually report to the Chief Executive
Officer 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 share holders or the investors.
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 crisis management of, for example, corporate downsizing, changes
in management or internal structure, product liability issues and industrial
disasters. In a difficult time such as the bear
market of 2008-09, IROs will want to stay visible and build relationships, be
factual in tone and not too quick to make promises, focus on the long-term
story and balance sheet strength, aggressively refute rumors and answer
concerns of investors, and coordinate media relations and investor
communications. Finally, IROs should remember: “The story is the business,
not the stock price.” The most highly regarded professional
member organization for Investor Relations in the United States is the
National Investor Relations Institute, or NIRI. 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. The Sarbanes-Oxley Act
The Sarbanes-Oxley Act of 2002 significantly increased the importance
of investor relations in the financial markets. The act established new
requirements for corporate governance and regulatory compliance, with an
increased emphasis on accuracy in auditing and public disclosure. Notable
provisions of the act which apply to investor relations include enhanced
financial disclosures and accuracy of financial reports, real-time
disclosures, off-balance-sheet transaction disclosures, pro forma
financial disclosures, management assessment of internal controls, and
corporate responsibility for financial reports. More specifically,
Sarbanes-Oxley sections 301, 302, 404, and 802 have been of particular interest
to companies improving corporate compliance. Similar to Sarbanes-Oxley
are the Keeping the Promise for a Strong Economy Act, 2002 in Canada, Financial
Security Law of France in France, and J-SOX in Japan. The European MiFID
Directive, although principally concerned with investor protection, also
covers regulation and compliance for listed European companies.
Non-US Based IR organizations AERI: Asociación Española para las
Relaciones con Inversores, AIRA : Australasian Investor Relations
Association, AIRP: Association of Investor Relations
Professionals, ARFI: Financial Сommunications and
Investor Relations Alliance, CIRA: Cercle Investor Relations Austria,
CIRI: Canadian Investor Relations Institute,
CLIFF: Cercle de Liaison des Informateurs Financiers en France,
DIRF: Danish Investor Relations Forening,
DIRK: Deutscher Investor Relations Verband e.V., Deutscher Berufsverband
für Investor Relations, FIR: Portuguese Investor Relations
Association FIRS: Finnish Investor Relations
Society, I2RI :Indonesia Investor Relations
Institute HKIRA: Hong Kong Investor Relations
Association, IBRI: Instituto Brasileiro de Relações
com Investidores, IIRF: International Investor Relations
Federation, IRPAS: Investor Relations Professionals
Association Singapore, IR Society The Investor Relations
Society, KIRS : Korea Investor Relations Service,
http:www.kirs.or.kr/main.html, ME-IR Society: Middle Eastern Investor
Relations Society MIRA: Malaysian Investor Relations
Association, NEVIR: Nederlandse Vereniging voor
Investor Relations, NIRF: Norwegian Investor Relations
Society, NIRI: National Investor Relations
Institute, JIRA: Japan Investor Relations
Association, SIRA: Swedish Investor Relations
Association, SIRV/IR club: Swiss Society of Investor
Relations IR club TUYID: Turkish Investor Relations
Society Notes
^ Public Relations Specialists ^ IR Cafe blog post on bear market
investor relations ^ Edited by Benjamin Mark Cole. The New
Investor Relations: Expert Perspectives on the State of the Art. Bloomberg
Press. ISBN 1-57660-135-8. External links
IR magazine IR Web Report