Investor relations

Investor relations (IR) 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." as defined by National Investor Relations Institute (NIRI).[1] IR also functions to assess the impact of a company's actions (e.g., acquisitions, change in dividend policy, introduction of new product) on the company's position in the capital markets (e.g., stock price, competitive position, public perception).[2]

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.

Structure

Typically, investor relations is a department or person reporting to the chief financial officer (CFO) 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." In smaller companies, the IR function is often outsourced to independent investor relations firms. Investor relations is considered a specialty of public relations by the U.S. Department of Labor.[3]

Many larger publicly traded companies now have dedicated IR officers (IROs), who oversee most aspects of shareholder meetings, press conferences, private meetings with investors, (known as "one-on-one" briefings), investor relations sections of company websites, and company annual reports. These reports are frequently self-published on the corporate website, though in the past, external services were more commonly used for mandatory disclosures.[4] 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 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.[7] 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 (Budget Measures), 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.

See also

• Public relations

External links

• IR7 Social Network for Investor Relations & IROs
• NIRI, The Association for Investor Relations
• Investor Relations Society
• IR Magazine, The Independent Voice of IR
• IR GO, South Korea
• https://fortune.com/2021/02/19/robinhood-brand-damage-gamestop-hedge-funds-wallstreetbets-reddit-stocks-gme-amc/
• Taiwan Investor Relations Institute (TIRI)