The best way to describe the investor relation is to think of the CEO of a publicly-traded corporation.
The CEO is the topmost person of the corporate pyramid and is entirely responsible for running the entire company to make it even more recognizable than before.
Let’s take an example of a company that everyone knows very well such as Apple, the current CEO of Apple is Tim Cook.
Tim Cook gets a report card, just like most students. But instead of getting grades on Maths, English, and receiving A or B grade.
He gets grades on the basis of his company’s performance, and then the grid is the stock price over time people feel at the CEO.
In this case, Tim Cook is really doing a very excellent job, and it also reflects Apple’s company’s performance. The stock is likely to go up for the CEO.
It means recognition and a lot of money, considering that many companies compensate their CEOs through their stock options.
In addition to their salary, the price of the stocks increases the value of all those options.
However, if investors have no faith in the CEO to increase the firm’s value, or they think that the CEO is taking the company towards the wrong direction.
As the stock prices decrease when this occurs in many cases, the CEO’s compensation will go far down.
And since it happens over a long period of time, the company can fire the CEO or ask him to resign.
How important the stock price is to the CEO?
Let’s look at how the stock prices move in different directions.
Stock prices move higher or lower due to the economics of supply and demand.
I am assuming here that the supply of shares remains relatively consistent the whole year.
If the demand increases or decreases, it will affect the price of the stock.
How does the CEO effectively and for their stock?
This is when investor comes into play, though many small as well aS micro capital public companies may have a dual role.
CFO or investor relations manager or officer most mid-cap and more giant corporations have a dedicated investor relations team ranging from one individual so words of 10.
What’s in it–
- What is an Investor Relation?
- Responsibility of IR Manager
- Where to Find Investor Relations Page or Tab
- Work of Investor Relations Department
- Qualifications for an Investor Relations Manager
What is an Investor Relation?
Corporate management makes relations with its investors, so they protect the investors’ interest in their company.
In every public company, there is a separate department for working on this relation. We call it the Investor Relation (IR) department.
The IR department provides information as well as Financial records about the internal affairs of the company to the investor.
Based on this information, they decide whether they invest in their company or not.
Responsibility of IR Manager
The investor relations team in two major segment; the first significant responsibility for the Investor Relations team is to build demand for the stock.
One can accomplish this by proactively reaching out to investors, going to investor events or holding meetings with investors.
The other responsibilities of the Investor Relations team are to keep close communication with current investors.
The investor relations team is responsible for keeping those investors up to date with everything that occurs with the company and how the company is doing financially by following the current investors well-informed.
The investor relations team would hope to stem any potential selling and entice further buying of the stock from current owners or stockholders.
The Investor Relations team is an integral part of any publicly traded corporation and typically answers directly to the CEO or CFO.
It is not usual for the Investor Relations team to be in very close communication with the CEO and CFO and even travel together to meet it.
Where to Find Investor Relation Page or Tab
Go to any public company’s official website you will find a tab or page named as investor’s relation.
Open the page or click on the tab you will get to know the company’s financial records balance sheets and statements.
Major public companies provide the information regarding the company’s internal affairs like the company’s growth and performance in this year or this quarter, financial data, accounting records, financial statements, balance sheet, profit and loss account, and reporting all compliances.
They provide such data to educate investors, so they can invest in the company.
Work of Investor Relations Department
The investr relation department has to communicate regularly with the accounting, legal, and executive management departments to take information about the company’s internal affairs and be aware of the investor timely.
The investor relations department informs them the company is fairly trading on the stock exchange and the future of companies is bright.
The investor relies on this information and invests in the company on the basis of this available information.
The investor relations department also communicates with all financial groups like investors, shareholders, and government organizations.
Investor protection act 2002 governs all activities of investor relationship manager or investor relation department, and this act has all the provisions regarding investor relation.
Qualifications for an Investor Relations Manager
Generally, a Bachelor’s degree in Finance, Accounting, Communications, Economics, or relevant fields is required for investor relations manager. A Master’s degree (like M.B.A.) is unnecessary, but it is considered an asset.
Or a work experience of 2 to 7 years in such a position.
He should know the investor protection act 2002, financial, legal, and accounting compliance.
In every public company, an investor relations department must inform and educate the company’s financial and internal affairs to its investors.
Investors analyze this data and decide whether they should invest in the company or not.
The company has to make relations with its investors to make them loyal to the company and protect their interests through regular communication or sharing the company’s internal affairs.
The role of Investor relations team is two;
The first significant responsibility for the Investor Relations team is to build demand for the stock.
Second, the Investor relations team is also responsible for marketing the company to investors to entice them that their company is a significant investment.
The investigation department has to communicate regularly with the accounting, legal, and executive management departments to take information about the company’s internal affairs and be aware of the investor timely.
Investor Relation (IR) – Meaning and its Importance
Summary: In every public company, there is a separate department for working on investor relations. We call it the Investor Relation (IR) department.
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