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Investor relations

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Investor Relations (IR) is the field of corporate communications specializing in information and disclosure management for public and private companies as they communicate with the investment community at large. Used internally, the term describes the department of a company devoted to handling the inquiries from shareholders and investors, as well as others who might be interested in a company's stock or financial stability. In many cases, the term "investor relations" is used interchangeably with "public relations," and it is sometimes referred to as "financial public relations" or "financial communications". Investor relations is considered a specialty of public relations by the U.S. Department of Labor.^[1] Many larger publicly-traded companies now have dedicated IR officers (IROs), who oversee many aspects of shareholder meetings, press conferences, one-on-one briefings, investor relations sections of company websites, and company annual reports. The investor relations function also often includes the transmission of information relating to intangible values such as the company's policy on corporate governance or corporate social responsibility. Recently, the field has trended toward an increasingly popular movement for "interactive data", and the management of company filings through streaming-data solutions such as XBRL or other forms of electronic disclosure have become prevalent topics of discussion amongst leading IROs worldwide. The investor relations function must be aware of current and upcoming issues that an organization or issuer may face, particularly those that relate to fiduciary duty and organizational impact. In particular, it must be able to assess the various patterns of stock-trading that a public company may experience, often as the result of a public disclosure (or any research reports issued by financial analysts). By definition, the field most closely relates to the duties of a Corporate Secretary, but also shares responsibilities with the Chief Financial Officer as needed. Most IROs will have top-level access to the Chief Executive Officer and Chairman or President of the corporation to ensure that the image of the corporation is maintained in a cohesive fashion. Due to the potential impact of legal liability claims awarded by courts, and the consequential impact on the company's share price, IR often has a role in crisis management of, for example, corporate downsizing, changes in management or internal structure, product liability issues and industrial disasters. The most highly-regarded professional member organization for Investor Relations in the United States is the National Investor Relations Institute, or NIRI. In the United Kingdom, the recognized industry body is The Investor Relations Society, while in Canada, the professional association is called the Canadian Investor Relations Institute, or CIRI. Australia's professional organization is known as the Australian Investor Relations Association (AIRA).

The Sarbanes-Oxley Act

The Sarbanes-Oxley Act of 2002 significantly increased the importance of investor relations in the financial markets. The act established new requirements for corporate compliance and regulatory governance, with an increased emphasis on accuracy in auditing and public disclosure. Notable provisions of the act which apply to investor relations include enhanced financial disclosures and accuracy of financial reports, real-time disclosures, off-balance sheet transaction disclosures, pro forma financial disclosures, management assessment of internal controls, and corporate responsibility for financial reports.^[2] More specifically, Sarbanes-Oxley sections 301, 302, 404, and 802 have been of particular interest to companies improving corporate compliance. Similar to Sarbanes-Oxley are Bill 198 in Canada, LSF in France, and J-SOX in Japan.

Notes

^ http://www.bls.gov/oco/ocos086.htm
^ Edited by Benjamin Mark Cole (2004). The New Investor Relations: Expert Perspectives on the State of the Art. Bloomberg Press. ISBN 1-57660-135-8.