Why do companies need a Professional Investor Relation Services?

Investor relation (IR) is a relatively new field of corporate governance that aims to improve the transparency and accountability of companies and strengthen their visibility and attractiveness to investors.  Institutional investors and equity analysts tend to ignore companies that lack profile-enhancing characteristics such as size, high liquidity, and a prominent public listing. Therefore, firm size and other leading indicators may be the main factors that attract large investors to the stock market, which may lead to a size premium in the stock market.

What is Investor Relations?

Investor Relations (IR) is a strategic management activity that integrates finance, communication, marketing and securities & regulatory laws compliance enabling the most effective two-way communication between a company, the financial community, and other constituencies that ultimately contribute to a company’s securities achieving fair valuation.

Objectives of Investor Relations

An investor relations (IR) department is a department of a company (usually a public company) whose job is to provide investors with an accurate overview of what’s going on with the company. This helps individual and institutional investors make informed decisions about investing in companies.

Why companies hire a professional investor relation firm?

• Professional IR Expertise- When a company lacks in-house expertise to effectively communicate with its investment community and manage investor relations activities.
• Resource Allocation – If a company outsources its investor relation activities, it can better concentrate on its core operations while ensuring better investor communications.
• Market Perception – Engaging with a reputable investor relations firm can enhance the company’s credibility and improve its relationships with the investor community.
• Special Situations – During important corporate events such as mergers, acquisitions, or IPOs, a company may require the specialized services of a professional investor relations firm to manage the increased communication and transparency requirements.
• Regulatory Compliance – A professional investor relations firm can professionally manage complex regulatory requirement compliances and ensure that the company’s communications stay in accordance with relevant laws and regulations.

Practical Activities of an Investor Relation Agency

Investors carry paramount importance to any company. Investors help companies get back on their feet. The company’s successes or failures must be communicated honestly to them. Depending on the size and valuation of the company, the investor relations department keeps the lines of information and communication open between the company and its investors. Other objectives of the IR team include:

• Producing reports such as annual reports and market performance evaluations
• Providing non-financial data to potential investors to increase the value of the company
• All financial information and its accessibility must comply with relevant laws
• Report to company executives on communications between the IR team and the public to ensure compliance.
• Make persuasive presentations of company information to analysts and investors to promote sales.

Of course, the decision to hire an investor relations firm is influenced by the company’s specific needs, resources, and strategic objectives.