IR: it’s all about the relationships
Almost nine out of 10 respondents (88 percent) say an ‘ability to build strong relationships with investors and analysts’ is one of the three most important factors in the success of IR, according to a new study from EY and IR Magazine.
This is followed by the ‘strength of the executive team’, according to 68 percent of the almost 900 IR professionals who make up the study, published as ‘Taking it to heart: exploring how investor relations is organized in companies pre and post IPO‘.
Asked to pick from six options the three factors they consider most critical to the success of the IR function, almost half (45 percent) of respondents place a seat at the table for IR in the top three, while a third cite ‘finance’s ability to produce timely, accurate financial reports’. The company’s ability to prepare timely, accurate forecasts is named by 29 percent of respondents while a fifth name the IR department’s assistance in driving valuation.
When it comes to that seat at the table, the majority of companies also recognize what IR has to offer the board. At more than three quarters (77 percent) of companies, an IR representative regularly attends board meetings, and the IR department provides regular written reports to the board at 83 percent of firms.
While written reports tend to be quarterly or even monthly, ‘IR representation at board meetings is more likely to be on an ad hoc or on-demand basis,’ write the study authors. ‘This is the case at 26 percent of companies globally, with 22 percent having quarterly IR attendance at board meetings and 14 percent monthly attendance.’
So what does the board want to know from IR? Market and investor sentiment and feedback comes top in both written reports (where it is discussed in 86 percent of reports) and meetings (85 percent).