Investor relations – Is it public?

Investor relations is regarded by all correct-thinking people as a branch of financial public relations, but it too struggles to come up with a decent definition of itself.

At its most basic, it could be said to be the direct marketing end of the stocks and shares promotion business. Investor relations centers around the close relationship and two-way communication between the company, its shareholders and those who directly advise them. Those who advise them are principally the stockbroking analysts who were memorably dismissed a few years ago by the then Chancellor, Nigel Lawson, as ‘teenage scribblers’. Analysts can therefore often be regarded, like journalists, as another conduit of information to be the ultimate investor audience, although increasingly, nowadays, investment institutions have their own in-house ‘buy-side’ analysts.

As many market traders will tell you, there is no substitute for direct contact with your customers and it is, therefore, extremely important for public companies to maintain a dialogue with their shareholders. For public relations people, this is potentially a very sensitive area. It is particularly important that those facilitating the communication do not get between the company and its owners. It is the role of a communications adviser to help improve the perception of the company. By getting between a company and its shareholders it is in great danger of becoming part of that perception.