Investor Relations (IR)

What Are Investor Relations (IR)?

The investor relations (IR) department is a division of a business, generally a public company, whose job it is to provide investors with an accurate account of company affairs. This assists private and institutional investors with settling on informed choices on whether to invest in the company.

Figuring out Investor Relations (IR)

Investor relations guarantees that a company's publicly traded stock is by and large fairly traded through the spread of key data that permits investors to decide if a company is a wise investment for their necessities. IR departments are sub-departments of public relations (PR) departments and attempt to speak with investors, shareholders, government organizations, and the overall financial community.

Companies typically begin building their IR departments before opening up to the world. During this pre-first sale of stock (IPO) phase, IR departments can assist with laying out corporate governance, conduct internal financial audits, and begin speaking with potential IPO investors.

For instance, when a company goes on an IPO roadshow, it is common for a few institutional investors to become keen on the company as an investment vehicle. When intrigued, institutional investors require definite data about the company, both qualitative and quantitative. To get this data, the company's IR department is called upon to provide a description of its products and services, financial statements, financial statistics, and an outline of the company's organizational structure.

The IR department's biggest job is its interactions with investment analysts who provide public assessment on the company as an investment opportunity.

Special Considerations

The Sarbanes-Oxley Act, otherwise called the Public Company Accounting Reform and Investor Protection Act, was passed in 2002, expanding reporting requirements for publicly traded companies. This expanded the requirement for public companies to have internal departments dedicated to investor relations, reporting compliance, and the accurate spread of financial data.

Requirements for Investor Relations

IR teams are normally entrusted with coordinating shareholder gatherings and press meetings, delivering financial data, leading financial analyst briefings, distributing reports to the Securities and Exchange Commission (SEC), and taking care of the public side of any financial crisis. In contrast to different parts of public relations (PR)- driven departments, IR departments are required to be firmly integrated with a company's accounting department, legal department, and executive management team, like the chief executive officer (CEO), chief operating officer (COO), and chief financial officer (CFO).

Moreover, IR departments must know about changing regulatory requirements and exhort the company on what should and can't be possible according to a PR point of view. For instance, IR departments need to lead companies in quiet periods, where it against the law illegal to examine certain parts of a company and its performance.

The IR department's biggest job is its interactions with investment analysts who provide public assessment on the company as an investment opportunity. These conclusions influence the overall investment community, and the IR department's must deal with analysts' expectations.

Features

• The investor relations (IR) department is a division of a business whose job it is to provide investors with an accurate account of company affairs.
• IR departments are required to be firmly integrated with a company's accounting department, legal department, and executive management team.
• IR departments must know about changing regulatory requirements and exhort the company on what should and can't be possible according to a PR point of view.