What is IR?
Investor relations is a process of building relationships with the financial community—those who buy, hold, sell, and recommend your stock—and communicating your company’s strategic, operational, and financial story. Many people make the mistake of viewing IR as an extension of marketing and public relations; however, it is a vastly different discipline that must be executed by highly skilled investor relations professionals who are dedicated to the practice. IR is about communicating a company’s corporate and financial story, whereas PR is about gaining visibility for your product, technology or services.
Investor Relations plays an integral role in corporate strategy, because when conducted effectively, it can have a positive impact on a company’s market value. With so many investment options, it is easy for the financial community to miss your story. You can create the environment for full and fair valuation by providing a deliberate, consistent, and accurate flow of information between the company and the financial community. The market traditionally rewards companies with less perceived risks. In fact, a study by the National Investor Relations Institute (NIRI) concluded that 82% of U.S. buy-side investors believe that investor relations impacts a company’s valuation, and by increasing the flow of value-added information, a company can reduce the risk of uncertainty surrounding your company’s stock. In addition, a proactive IR program reaches new investors and research analysts that are unfamiliar with your investment story. Increasing the awareness and number of market recipients can result in increased demand for your company’s stock both pre- and post-IPO.