What is Investor Relations?
As part of our “back-to-basics” blog series on the basic tenants of our business, we’re going to dedicate this post to investor relations.
It is important to note that the number of investor relations firms, even in major financial markets, such as New York, Los Angeles, Chicago and San Francisco, is relatively small. That’s probably why when we’re at events or gatherings outside of our industry, we’re often asked, “What exactly is investor relations?”
Let’s keep it simple: Investor relations, or IR for short, is a communications specialty that focuses on helping publicly traded companies get their stories out to Wall Street, including shareholders, potential investors and the broader financial community. Another term sometimes used to describe investor relations is financial public relations.
Public companies come in all sizes, usually determined by market capitalization, which is a company’s total stock value in the public marketplace on any given day. Stocks can be traded in the U.S. on Nasdaq, the New York Stock Exchange (NYSE), the OTC Markets, or on foreign exchanges such as the Toronto Stock Exchange (TSX), London Stock Exchange (LSE) and Frankfurt Stock Exchange (FRA), among many others.
While public companies are highly diverse in what they do, all of them are regulated by governing agencies, depending on where their stock is traded. In the U.S., for example, the main governing body is the Securities and Exchange Commission (SEC), which requires, among other things, that all public companies follow a set of rules and regulations that ensure free and fair disclosure to everyone.
Compliance with these SEC rules is complex for those who are not in the know. Most public companies rely on investor relations professionals, whether in-house or externally, in addition to SEC attorneys, to assure compliance and language that is understandable. The main job of the IR professional is to help the public company communicate clearly and transparently, and in keeping with the law.
Investor relations encompasses many facets, such as disseminating financial information via traditional and social media; responding to investor inquiries; identifying prospective investors and research opportunities; organizing informational and required annual meetings; preparing investor presentations; and more.
Bottom line, the investor relations function is to manage the communications between a public company and investors, while at the same time being cognizant of other audiences – including employees, customers and suppliers – that may be recipients of the information.
The ultimate goal of IR is to deliver a cohesive and compelling message that resonates with investors, ultimately to help build shareholder value that is consistent with a company’s performance, progress, prospects and peers.
George Medici, gmedici@pondel.com
