Maximizing shareholder value by combining IR with corporate communications - and reporting directly to the CEO

In most cases, the IR function reports to the CFO and becomes an extended arm for communicating numbers and figures to shareholders and the market at large – certainly a core service function.

But if you instead want to create clear shareholder value, you should consider combining IR with corporate communications and drawing the line of reporting directly to the CEO. In this way it becomes a function that not only conveys information but also creates clear and valuable shareholder value.

This might be though being able to explain in an easy-to-understand way what is important for the company's earnings, with concrete, current and vivid examples. It could stem from responding effectively if there is a discrepancy with the market’s perception of the company, or through maintaining a controlled and secure grip on the company’s total communication in the event of a crisis.

According to a recent internal survey conducted by the Swedish large-cap EPIROC, the proportion of IROs reporting directly to the CEO at Swedish companies on the OMXS30 decreased in 2024 by 3 percentage points (from 12 to 9 percent) compared to the same survey in 2022. Instead of reporting to the CEO, more IROs now report to the CFO – a finding mirrored in recent research by IR Magazine. At Swedish firms, this puts IR at risk of becoming a service function that conveys numbers and figures to inquisitive investors and analysts.

According to the same survey, just 9 percent of IROs have overall responsibility for corporate communications, in addition to responsibility for the relationship with investors and analysts. This is, in my opinion, a lost opportunity in building a strong reputation and consistent, group-wide communication.

Dressing the numbers

The difference is all about dressing the numbers up in important company messages and facts – and context. Rather than leaving the numbers naked and alone, this dressing up gives them life and turns them into important building blocks in the image you want your company to represent.

By giving the IRO the overall responsibility for the group’s corporate communications and by letting the function report directly to the CEO, you create an effective and impactful tool in building credibility among a broad base of stakeholders.

This also offers the opportunity to extend a more sensitive feeler towards the market and its views on the company’s behavior and communication. After all, the IRO’s knowledge of external stakeholders includes investors and analysts who otherwise risk being handled separate from the company’s total news and activity flow.

A privileged position

One should also not ignore the fact that the IRO has access to this group like few others. A professional and knowledgeable IRO has such an important ’ticket to the dance’ with close access to the market that he or she can reach with messages and material that go beyond the traditionally more numerical focus.

In their book on optimal company valuation, titled 'The Importance of Symbiosis Between Presentations, Investor Relations and Research', authors Per-Erik Holmström and Isabelle Boyer de la Giroday write about the IRO’s role as a ‘catalyst for the company’ and the importance of taking advantage of this to both realize value and to reduce the risk of misunderstandings and valuation risks.

The importance of connecting investor relations and corporate communications cannot be overstated. In a world of fast-moving information and great opportunities for communication, a cohesive force with all stakeholders up the sleeve and a full overall picture of their interests and needs becomes a valuable asset. This in turn creates clear and strong shareholder value.