17 Dec, 2019

Investor Relations (IR) is an important aspect of managing communications between investors and a company’s corporate management. Investor relations caters to managing company crises. Investor relations requires a company to handle any inquiries related to the functioning of the company.

Investor decisions and feedback are conveyed back to company leadership, thereby maintaining smooth investor-company relations. Due to regulations pertaining to financial reporting, most companies have now setup dedicated investor relations departments. Let’s look at the objectives and key benefits of investor relations.

Investor Relations Objectives

The objective of Investor Relations is to help investors make important decisions regarding a company’s equity.

An IR department works on providing up-to-date information about a company’s financial statements, insights on potential shareholders, the status of company operations and any third-party equity research data.

Investor Relations also include giving investors annual/quarterly business reports, which provide quantitative and qualitative information. Investors are provided with changes in the business model and the strategic direction it could take.

IR Website

This information is disseminated via sections on a company website, which are solely dedicated to IR. Other sources of company information include shareholder meeting minutes, press releases and annual reports.

When Investor Relations is maintained correctly, it leads to a level of stability in a company’s stock prices. Shareholder expectancies for a company are formulated by actual investor decisions made by the management.

IR Communication

Communication is the next objective. The IR department of a company is responsible to forward input from stakeholders to the management. When things aren’t going well, the IR department will advise a company’s management with corrective measures.

An IR department’s priority is to expedite this two-way communication. The IR department does not fall under any fixed company structure. It can be a role handled by an individual or a group. A Chief Financial Officer (CFO) or someone from the Finance or Accounting Department usually takes over the role of handling investor relations.

Investors are essential to any company. Investors help companies get on their feet. The operational successes or failures need to be honestly conveyed to them. The IR department, depending on the scale and size of a business, keeps the line of information & communication open between the company and investors.

Investor Relations act as a passage or portal through which company executives and company investors communicate. The information is funnelled to the IR department. It moves from the investor to the analysts and then to anyone who demands that information.

The IR department handles most investor communication by themselves, without involving the top management. The triaging of communication avoids overloading the executives. Then comes the translation. The IR department translates the language of all investors – finance.

This language of projected goals, earnings per share, dividends and profit margins are translated back to the investors. These are retrieved by the IR team, based on company interests, company values, roadmaps, and other third-party investments.

Publishing an annual report for investors is one way of ensuring the lines of communication remain open. The report needs to impress investors. Hiring an award-winning annual report design agency turns your reports into pieces of visual storytelling.

At the end of the day, a CEO or CFO will remain as the face of the company. An IR department only mediates between the company and the investors.