When you talk about investor relations, you refer to a department or a third-party firm that handles the finance, marketing, security laws, and communications of a certain organization. Investor relations provide a fantastic way to communicate between constituencies, the financial community and the company. They also handle any inquiries of investors and shareholders, as well as those interested in making investments in the company.
You have two choices when it comes to investor relations — create your own investor relations department or hire a company who can fill the responsibilities. But before you do, you should have some essential knowledge of the things they can accomplish for your company. An investor relations firm can help you set up personal and public meetings, press conferences, and investor assemblies. Also, they are charged with disseminating information regarding the policies of the company on corporate governance and social responsibility. Due to the recent developments in technology, this information can now easily be fed through programs like XBRL.
The investor relations firms should always be up to date with the latest news regarding your company, as well as potential issues that you could encounter in the future. They function much like the media — always on the look out for the latest news. They should also take several issues into consideration like fiduciary changes and organizational movements. Moreover, they have the responsibility of studying stock trading patterns so that they can give shareholders some relevant information for investing.
Aside from the previously mentioned tasks, investor relations should also be on the scene during critical situations. They know how to handle issues like product liabilities, corporate downsizing, change in stock management, and industrial trends. In the event of a bear market, transparency has to be shown by the investor relations firm. They have the ability to examine the strengths of the balance sheet, and address any concerns that investors might be having.
Your selected agency should also talk to the media and be able to face the public if something goes wrong. They should always be ready to prepare a press release or statement for the shareholders and the public, whether the news is good or bad.
As you can see, their role of is constantly evolving and expanding. From its sales and promotions approach, it has now become more focused on financial, communication, and law-related activities. In terms of communications, they are the ear for your shareholders to always have a voice. Aside from disclosing information to the public and the shareholders, investor relations companies also welcome feedback.
In order to adhere to best practices, officers of these firms also consult other IR professionals so they can get advice on how to better perform their responsibilities. Their participation in organizations like the Investor Relations Association provides a glimpse of how they can serve the public better. There is always constant feedback such as surveys and phone calls to show how concerned they are in improving their service.
At the end of the day, investor relations companies are all about serving their clients, shareholders and investors. They work together to benefit both sides from the investments. Building better client relations can give you a premium on how your investments would grow, and it’s all thanks to a good firm that you can rely on.
Josh Yudell is widely considered to be an expert in the fields of investor relations, SEC compliance, corporate finance and capital structure and is a frequent contributor to blogs and publications, both online and in print.