Chapter 1
This book is dedicated to one of the most important functions of modern corporations, investor relations. Investor relations is responsible for raising shareholder capital to enable corporations to implement their vision into reality. Investor relations helps companies survive through various stages of their development by enabling access to shareholder capital. Finally, investor relations ensures corporate executives are doing everything they can to lead corporations to long-term sustainable growth, while simultaneously benefiting the society and providing financial returns to shareholders.
The book consists of four sections. The first section discusses what investor relations is. The definition of the investor relations profession is discussed in detail, and key assumptions on which investor relations relies upon are analyzed.
The second section of the book includes chapters 3, 4, and 5 and is dedicated to the factors that influence the profession of investor relations. This section starts with the historic developments of the profession—changes in the societal and political environments created the need for investor relations and continued changing the functions and roles of investor relations professionals. Three periods in investor relations development are identified and described: communication era, financial era, and at present, synergy era. The historical changes and current state of legislature governing investor relations also are analyzed. The second section of the book concludes with the discussion of professional and ethical obligations of investor relations officers.
The third section of the book reviews the activities investor relations officers perform on day-by-day basis. Conference calls, investor meetings, annual reports, and other tactics that form the foundation of investor relations are discussed. From tactics, the book shifts to strategies. What is the strategic goal of investor relations? The book finds the answer in building relationships with the financial community to create shareowners out of shareholders with extended holding periods, active involvement with the company, and two-way communication with the corporate executives. The relationship building function of investor relations is analyzed and necessary components to the success of relationship building strategies—such as extended disclosure going beyond minimum financial disclosure requirements as well as increased focus on nonfinancial information that can explain the company’s business model and future growth potential—are discussed. This section includes chapters 7, 8, 9, and 10.
Finally, the last section of the book tries to take a peek into the future of the profession. What will happen with investor relations tomorrow? How will the profession and professionals need to change to better adjust to the future demands that investors, legislators, and various financial market players impose on them? What will the continued globalization of the financial markets bring to the profession? How can the profession use to its best advantage the changing technological landscape with advent and adoption of electronic communications, social media, and instantaneous trades