Академический Документы
Профессиональный Документы
Культура Документы
Chapter 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Chapter 2 What Is Investor Relations?. . . . . . . . . . . . . . . . . . . . . . 3
Chapter 3 Investor Relations: Past . . . . . . . . . . . . . . . . . . . . . . . . . 7
Chapter 4 Investor Relations: Present. . . . . . . . . . . . . . . . . . . . . . 19
Chapter 5 Legal Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Chapter 6 Ethics and Professionalism. . . . . . . . . . . . . . . . . . . . . . 37
Chapter 7 Main Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Chapter 8 Focus on Relationship Building. . . . . . . . . . . . . . . . . . 45
Chapter 9 Focus on Extended Disclosure. . . . . . . . . . . . . . . . . . . 49
Chapter 10 Focus on Nonfinancial Information. . . . . . . . . . . . . . . 59
Chapter 11 Future of Investor Relations. . . . . . . . . . . . . . . . . . . . . 69
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Chapter 1
Introduction
This book is dedicated to one of the most important functions of modern
corporations, investor relations. Investor relations is responsible for rais-
ing shareholder capital to enable corporations to implement their vision
into reality. Investor relations helps companies survive through various
stages of their development by enabling access to shareholder capital.
Finally, investor relations ensures corporate executives are doing every-
thing they can to lead corporations to long-term sustainable growth,
while simultaneously benefiting the society and providing financial
returns to shareholders.
The book consists of four sections. The first section discusses what
investor relations is. The definition of the investor relations profession is
discussed in detail, and key assumptions on which investor relations relies
upon are analyzed.
The second section of the book includes chapters 3, 4, and 5 and
is dedicated to the factors that influence the profession of inves-
tor relations. This section starts with the historic developments of the
profession—changes in the societal and political environments created
the need for investor relations and continued changing the functions
and roles of investor relations professionals. Three periods in investor
relations development are identified and described: communication era,
financial era, and at present, synergy era. The historical changes and cur-
rent state of legislature governing investor relations also are analyzed. The
second section of the book concludes with the discussion of professional
and ethical obligations of investor relations officers.
The third section of the book reviews the activities investor relations
officers perform on day-by-day basis. Conference calls, investor meetings,
annual reports, and other tactics that form the foundation of investor
relations are discussed. From tactics, the book shifts to strategies. What
is the strategic goal of investor relations? The book finds the answer in
2 Managing Investor Relations
and the board of directors to ensure that decisions that do not meet the
interests of shareholders are not accepted.
Another important change in the definition was the addition of
two-way communications. Two-way communications was added to the
definition of investor relations to substitute one-way flow of providing
information about the company. Previously, investor relations was often
equated with disclosure—we put information out there, the rest is not
our business. The shareholders, however, demanded to be heard. The
feedback loop in communications is a necessity. As the influence of share-
holders grows, the companies that refuse to listen to shareholders suffer.
In fact, companies should demand from their investor relations offi-
cers to conduct shareholder research in order to learn who owns the
stock, why they own the stock, and what shareholders think about the
company, its management, and the decisions that management makes.
NIRI recommends, “The company’s investor relations officer . . . should
be required to meet with an independent committee of the board . . . to
report feedback from investors and analysts.”2
The feedback is analyzed at the highest level of the organizational
hierarchy and is used in the decision making and strategic planning.
CEOs expect their investor relations officers to be actively engaged in
the corporate decision making and supply the information from share-
holders and about shareholders to the management team. Indeed, it is
vital for the management of the company to know who the organization’s
investors are as such knowledge enables the company to serve investors
better. Kevin Rollins, former president of Dell Inc., explains, “We’ve also
charged our investor relations team with sharing and interpreting feed-
back from the investment community for us . . . ultimately, my job and
Michael’s [CEO Michael Dell] job is to lead Dell in a way that drives
sustainable, dependable shareholder value over time.”3
The third important change in the definition concerned the overall
goal of the investor relations activities. Earlier, the goal was to have a
positive effect on the share price—the higher the better. Enron’s disaster
can arguably be attributed to such a view on investor relations. Current
definition of investor relations emphasizes the need for a “fair value” as
opposed to a “high value.” The goal is to help investors and financial
analysts understand the true value of the company’s business and to help
them adjust their estimates no matter if it means decrease or increase in
What Is Investor Relations? 5