Investor Relations – Importance And Functions They Perform

Investor relation has seen growth actively over the last few years. It is hard to imagine IR is not an essential function of big businesses. Where they have a shareholder base internationally, it provides substantial support for the company’s financing and is thereby directly involved in value establishment.

IR blends communication, finance, and marketing to manage information flow efficiently. This flow gets managed between a public company, its shareholders, and its investors.

It is not to mention that investors are a very significant part of any business growth and development. Because of this truth, it’s of the utmost significance for companies to keep strong and transparent relationships with them. This is where the investor relations department comes into play.

In this article, you will get help regarding understanding investor relations in a better and broader sense. We have broken it down into many specific and manageable segments for your clarity. Let’s jump right in without any further ado.

Find Out What Goals Of Investor Relations Is Towards A Company?

  • To allow the business to accomplish the ideal share price that demonstrates the primary value of the company.

  • Symbolizing the business to investors and depicting investors to the company

  • Offering financial details to investors (retail and institutional) in a convenient and precise manner

  • Offering non-financial data to assist company valuations

  • Analyzing the regulations of stock exchanges and securities commissions

  • Inoffensive sales promotion or “closing.”

  • Submitting investor response to company administration and the board

  • Constructing responsive capital markets for forthcoming financing at advantageous terms


Functions Performed by Investor Relations

  • Accomplishing the governing duty to offer information

As an information provider, investor relations is understood completely as accomplishing regulatory needs. The communication related to finance is reactive and adapted in the direction of most minor requirements.

  • Communication Function

Along the line of a communication function, the IR manager is seen, specifically as the ambassador of the company in the capital market. This is different in comparison to what type of IR is run by the finance function.

A few say that IR is an extension of corporate communication. Some of them say that they actually pertain to accounting or strategy.

What we feel is that for an external effect, it is very necessary to have a single voice policy, and that must be handled from a main point in the company.

  • Marketing Function

The role of IR as a marketing function is to market the shares. The aim is to enhance the share price and build a positive image of the company. But there is a dissimilarity between equity story selling and the utilization of techniques of marketing in contacting investors.

  • Finance Function

Here IR is presumed as carrying our support service in the company for the finance function. The prominent role of IR managers is to offer information and elucidate the numbers.

  • Integrated activities

Within a company, an independent functional department is an IR that coincides with the finance and communication functions. Not only them but with corporate governance, M&A, strategy, and corporate development.

  • Educational Function

It is even an educational function. It introduces operational business departments within what way capital markets operate. And as an owner of the company, what are the requirements of shareholders are.

As a central point for numerous external and internal shareholders, IR conveys essential support to the company’s financing. And is thus straightforwardly involved in developing value.

Departmental And Personal Development Possibilities

It’s a fact that various roles of IR are not obviously described. They match both the historical and today’s perspectives on the features of IR.

Against this background, it is challenging to talk about the Investor relations profession. However, we know that IR is very well developed in listed companies of a specific capital market orientation and size. It doesn’t matter what their type is.

We can tell you that further investor relations are incorporated in tactical decisions.

And even in the broader board of executive management. They generally have a connection with departments like corporate governance, M&A, or corporate development. And has straight access to the CEO, the powerful status becomes within the business and therefore in the capital market.

With time, the professionalization and standard of every business are enhancing. Thus investor relations officers can build their responsibility area and undertake a strategic role.

With the information of the various parts IR plays under businesses, IROs can place themselves appropriately within the company. They can recognize growth possibilities both for the work itself and for their own individual careers.

Now that we know the importance of IR and what functions they perform, we have even understood the goal of IR. So now is the time to learn the benefits of an IR team.

Investor Relations

Benefits of a Good Investor Relations Team

Builds Credibility

Getting an IR team in your company will develop credibility. The reason is that they help in sharing the necessary information about the company’s operations. And the data is transferred to those who can help in uplifting the company.

Sharing the right and timely information will create trust among many shareholders and other businesses. Investors will be happy and always ready to deal with your company.

Increased Loyalty

If you get a great IR team for your company, then you will surely be going to have a very loyal shareholder base.

Sharing the correct information about operations will guide the shareholders. It will even help in making decisions regarding the buying share process. This activity will build trust and enhance the faith.

In case you don’t have an IR team, then we would recommend you to get one and enjoy all the benefits.

Final Thoughts

Investor relations have so many benefits, roles, and needs.

Thus, it becomes essential to spread the word of getting a responsible and reliable IR team for your company.

Make sure you go through the points shared above so that it will become easy for you to build a structure regarding involving an IR team with all the details in mind.

It’s easy to find one because most big companies now have an IR team that helps them deal in the capital market.

Thanks for reading, please let me know your thoughts and comments below. 

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