The Importance of Investor Relations in an Organization

Investor Relations is a combination of finance, communication, and marketing that generates an effective information flow between a public company, its investors, and stakeholders. Investor relations firms are a strong pivot that drives the overall growth of any company.

The growth and success of a company relies on its investors. Maintaining a healthy and trustworthy relationship with investors is very important for a company. The investor relations department of a company plays a vital role in managing this task.

This article will discuss in detail what investor relations is, how it works, and why it is crucial.

What do investor relations firms do?

The investor relations office works as a company representative to the investors and represents the company’s investors. Investor relations officers have the following goals:

• They help the company to attain an optimum share price that portrays its fundamental value.
• They efficiently provide accurate financial information to the investors, i.e., retail and informational
• To support the company’s valuation, they provide nonfinancial data.
• Their role is to observe the rules of securities commissions and stock exchange.
• They promote closing or non-aggressive sales.
• They inform the board and company management about the feedback from the investors.
• They build receptive capital markets for future financing.

Investor Relations Firms: The Department

The executives like the chief executive officer (CEO) and the chief finance officer (CFO), have a lot on their hands. They have to deal with all company matters, to help them out in their daily tasks.. They take the word from them to deliver to the company and act as a communication portal between the company and Wall Street.

The Investor Relations firm  acts as the face of the company in the capital market. Although the head of the company is viewed as the company represented by the investors. When it comes to the inner workings of the top publicly traded companies, the IR officer works as a middle man.

Working with Wall Street

The executives who run the company, like the chief executive officer (CEO) and the chief finance officer (CFO), have a lot on their hands. They have to deal with all company matters every day, to help them out in their daily tasks, the Investor relations firms deal with Wall Street. They take the word from them to deliver to the company and act as a communication portal between the company and Wall Street.

The Investor Relations firm represents the company and acts as the face of the company in the capital market. Although the head of the company, i.e., the CEO, is viewed as the company represented by the investors and the stakeholders, when it comes to the inner workings of the top publicly traded companies, the IR officer works as a middle man.

Communication

The Investors Relations department is responsible for working as a communication passage between the investors and the company. but let’s break it down a bit further.

The first role of the IR department is to act as a triage of the communication channels. When any outsider like investors, or analysts, demands information from the company, they are transferred to the IR department. 

The IR department handles the sorting out of people and handles the passing off and passing down of people. So the higher executive officers are not burdened with everything. In this way, the executives focus on their other tasks and do not have to worry about every request of information,

Their second role is translating communication riddles. The IR department translates the language that Wall Street speaks. It means that the IR reads how Wall Street and investors view the company and then conveys this to the company executives. 

The IR department receives how the investors and stakeholders feel about the company. What they see as assets and flaws, what they are impressed by, what they do not like in the company and want to be changed. 

The final role of IR is to convey the values, interests, and answers of the company back to Wall Street. By converting it into the language they understand like profit margins, projected goals, Earnings Per Share (EPS), and dividends.

Investor Relations Functionality

The IR department serves the company in many ways. \. We have discussed the roles the IR department plays in the smooth running of the company so far, now; 

let’s take a look at some of their functions:

• Coordination of meetings
• Conferences for shareholders and the press
• Releasing financial information
• Taking point on financial briefings
• Filing and publishing reports with the Securities and Exchange Commission (SEC) or other relevant commissions (depending on where the company is listed)

As the department of IR has so many roles and functions, the department must remain integrated with the management team, executives, and all the other departments in the company. Llike the finance and legal departments. Digital IR websites play a vital role in publicly traded companies. Having investor relation websites increases visibility and helps investors to analyze the stocks and company performance.