Investor Relations
The investor relations (IR) department is an integral part of a public company, whose priority is providing investors with timely, correct and reliable information about the current state of affairs in the company. The investor relations division is so important because a timely analysis of the company's financial statements allows an investor to make the best decisions about investing in a particular company.
Investor Relations explained
Investor relations act as a sort of guarantee that public companies trade shares fairly by disseminating key information that helps investors determine whether a company is the best investment for their own purposes. Building communications between investors, financial institutions and government authorities is one of the tasks of the investor relations (IR) department.
Commonly, an investor relations division is created by a company before it goes public. Investor relations departments can help a company to improve corporate management and perform internal financial audits at the pre-initial public offering (IPO) stage.
An institutional investor may take an initial interest in a certain investment instrument at the time of the company's IPO presentation. Then, the institutional investor may require comprehensive information about this company, which is mainly contained in the financial statements and statistics of the public firm.
More about Investor Relations
With the adoption of the Public Company Accounting Reform and Investor Protection Act in 2002, also called as the Sarbanes-Oxley Act, the reporting requirements for public companies were tightened.
In connection with the adoption of this act, public companies needed internal departments dealing with investor relations and monitoring the exact compliance with reporting requirements and the dissemination of financial information about the company.
Role of Investor Relations
The main functions of the investor relations department are:
- coordinating press conferences and meetings of shareholders;
- publishing the company's financial data;
- organization of briefings for financial analysts;
- publishing reports for the Securities and Exchange Commission (SEC);
- dealing with the public side of any financial crisis.
Close interaction with the management team and financial departments of the company, in particular with accounting and legal departments, is a distinguishing feature of the investor relations from other public relations departments.
Moreover, investor relations departments should keep abreast of constantly changing regulations and provide the company with up-to-date PR advice. Optimal management of the company during the quiet periods is another one responsibility of the investor relations.
Interaction with investment analysts and managing their expectations helps to form a public opinion about the company as one in which everyone would like to invest, and it is the most important role of the investor relations department.
