How Did Investor Relations Evolve?
Investor Relations (IR) has evolved significantly over the last 15 years. Most of the change came during the 2007 financial crisis. IR used to be a part of public relations; however, it has become an important position on its own now. It is now an essential part of companies all around the world. Companies that wish to attract serious investment capital and boost liquidity have a well-rounded investor relations program.
A few decades ago, we could see investor relations officers being tasked with communicating with the company’s investors about which events could have a possible impact on its stock valuation. However, in recent years, investor relations officers perform many other tasks such as executing sophisticated competitive analysis, making sure there is regulatory compliance, engaging in corporate sustainability efforts, and taking part in strategic planning. Because the investor relations department performs so many tasks that contribute considerably to the company, their roles have a distinguishing influence on a company’s stock value.
Investor Relations in the Modern Day
In recent years, we have seen investor relations evolve into a proactive and strategic department for companies. Investor relation departments must be highly skilled, as they were a part of public relations. However, now they need to be well-informed about a company’s operations such as budgets and forecasts, financial planning, IT systems, must know risk management, and other aspects that contribute to the company’s stock value.
Because investor relations does not only comprise communication now, the IR officers tend to come from a financial background. Most investor relations officers are former sell-side or buy-side analysts, CPAs or CFAs, and have a comprehensive understanding of the company’s financial situation.
Investor relations is now a representation of the company apart from being only a communicator between investors and the CEO or CFO. All those who wish to invest in the company, such as retail or institutional investors or hedge funds, first contact the investor relations officers of a company.
Some basic responsibilities of investor relations include:
- Organizing investor outreach activities, non-deal roadshows and analyst days
- Putting together the conference call scripts or press releases
- Editing merger and capital-raising releases
- Preparing executives for different positions
The Evolution of Investor Relations
- Investor Relations Officers in the Modern Day – they understand what they need to do to succeed in this proactive, strategic and global role
- Drivers of Change – they learn how easy access to information and pressure of new regulation has had an impact on the professionalization of investor relations
- Social Media – investor relations officers, in the modern day, understand the importance of social media and how using these platforms can expand their reach and improve the company’s image
Conclusion
Investor relations is a vital part of every company. As we have mentioned above, the role of IR officers has evolved greatly in recent years, and it will continue to do so.
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