Investor relations is a set of activities performed by a company to communicate its financial position to its stakeholders.Therefore investor relations professionals need to link communication to company's strategy and vision as frequently as possible.So Investor relations plays a key role in increasing shareholder value and even reputation.
The core objectives of investor relations are:
Explain the company's vision, strategy and potential to the investors this is essential because one the constituents have a clear understanding of what a company intends to do is when they start building their relationship with the company.
Ensure the expectations of the company's stock price are appropriate for its earnings prospects, the industry outlook and the economy because the company needs to understand investor concerns and expectations for their organizations and anticipate what the market anticipates from the company.
Reduce stock volatility because its important for the company to maintain a stable stock price and shareholder base. Companies with stable share prices enjoy a lower cost of capital and issue new equity more economically.
The different type of investor that IR target is as follows:
- Institutional investors
- Intermediaries
- Individual investors
- The media
- Analysts
- Rating Agencies
Many companies like IBM, Infosys and Wipro have specially dedicated section for investor relations.
Finally i would like to say that in the changing environment the relationship between the investors and the company does tend to change either due to fall in the stock value or due to reasons such as frauds or corporate scandals, so its vital for the company to maintain a good reputation with its investors and potential investors.
The greatest example of corporate scandals affecting share value is the case of Enron which was forced to bankruptcy after its involvement in a corporate fraud which was world famous.
reference: http://pd.cpim.org/2002/july07/07072002_enron_worldcom.htm
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