Investor relations are the activities of a publicly traded company that deal with the disclosure of information to the bond and share holders of the company.
For managing investments and monetary help, most of the firms and people hire a financial investment advisor. These financial investment advisors manage the dealing out of shares and bonds; they counsel the investor relations on his financial issues and implement policies for corporate takeovers and mergers of companies. The work of a financial investment advisor would typically involve a thorough knowledge of finance and accounts. The advisor should be able to plan strategies and needs to be smart and quick enough when asked for an advice. The investment advisor should be able to help his client work out their financial sketch and objective that they would like to achieve in a set period of time. The work of a financial investment advisor is far more critical than it is thought. Investor relations are a fast-stepped and rapidly changing world where communications technology, SEC rules, financial trends and the news media frequently challenge the status quo.
Investor Relations also refer to those activities that are required to support the market regulatory requirements.
The evolution of investor relations covers three eras – from 1945 to 1970 (the communication era), 1970 to 2000 (the financial era) and from 2000 onwards (the synergy era). In the communication era, investor relations and issues were handled by press agents or other publicists. The lack of financial expertise and strategic management were the weak areas of this era. In 1953, was Ralph Cordiner, the chairman of General Electric created a new position for handling shareholder communications, which is today known as ‘Investor Relations.
In the financial era, professional investors became important. Finance professionals and accountants handled tasks related to investor relations. In the current era, an effective combination of communication and financial skills are utilized to contribute to investor relations. This two-way communication enables the company and investors to share information and helps to improve understanding on both sides.
Large companies have entire departments and web sites dedicated to investor relations now. It is very important that the information is released to the investors correctly and timely. This is required to ensure that the market place remains a fair and level playing field for all who participate. Investor relations concern any information about the company that may affect the share price or earnings of the company. Earnings releases, earnings forecasts, annual and quarterly reports and most press releases are all part of investor relations and the responsibility of the investor relations officer or department.
On behalf of the financial advisor good communication skills and building investor relations is a part of the deal to become a successful financial investment advisor. As the investor is concerned he should be able to build trust in the advisor, as this is the most important issue for a long term relation.
In the past, investor relations focused on just the release of financial information, but the current trend is for increasing the scope to the degree that almost everything issued by the company is the responsibility of the investor relations department. This is in part due to the increased regulatory requirements and also in part due to the recognition that almost everything a company does either immediately or eventually will affect profits or the share price.
If you are thinking of investing in a company and would like more information you would contact the investor relations department. It is their role to interact with you the investor and provide any information you require. They will be very helpful because in a real sense they are also trying to market the company to you. It is in the company’s best interest to attract investors, since investors are a source of capital for the company, and increased investor interest leads to increases in the company’s share price. The investor relations department is the company’s only interaction with the share market that it has full control over.
In most companies, several people are usually responsible for investor relations activities. These range from the chief executive officer (CEO) or chief financial officer (CFO) to the public relations manager or investor relations manager. The secretary to the board of directors may also be included. The final responsibility for investor relations policy lies with the company’s CEO or CFO who deal with the main aspects of policy such as the company’s vision, strategy and prospects. The policy aspects of investor relations and the responsibility for these aspects can best be handled by an investor relations manager.
Investor relations managers have a similar position in relation to the board of directors as human resources managers or marketing managers and are responsible for investor relations policy and ultimately for marketing their company’s shares.
They manage their own department, which co-ordinates and carries out investor relations policy. Communication with interested parties takes place through investor relations managers instead through the CEO or CFO. Investor relations managers enjoy the trust of the board of directors and have direct access to all board members. They are aware of all developments that take place in the company, are familiar with the company’s policies, and know how to communicate these to interested parties. They help carry out investor relations policy, advise the board of directors and coordinate policy horizontally with divisions such as business development, marketing and corporate communication.
Thus, in the end, investor relations is all and all a strategic management responsibility that integrates communication, finance, marketing and securities law compliance to enable the most effective two-way communication between a company, the financial community, and other constituencies, ultimately contributing to a company’s securities achieving fair valuation.