Proving your worth: the Holy Grail of IR

‘The financial crisis was a huge challenge,’ said moderator Neil Stewart, quoting John Andrews, former head of IR at Citigroup. ‘But it was good for IR: the role of reputation became paramount.’

As economies continue to struggle and headcounts fall across IR departments, however, panelists at November’s IR Magazine Webinar sought to uncover what Stewart called the Holy Grail of IR: proving the value of IR to management and investors. But how do you quantify IR?

‘I don’t think the ‘one true measure’ really exists,’ said Beate Melten, director and global head of IR at Citi Depositary Receipt Services and one of the webinar panelists. To really demonstrate your worth to management, Melten recommended building credibility with investors: ‘Who do investors turn to first? Do they call you? That’s something you can use to prove your value to management.’

Proving your worth to investors is an increasingly challenging job, however. ‘Investors today expect much more from you,’ explained Melten. ‘You need to know about your company, your competition, the macro environment. The world today is much smaller; you are in competition with every company around the globe that fits into a certain investor base.’

Fellow panelist Tim Craighead, director of Asian research & senior gaming analyst at Bloomberg, said a successful IRO must have an ‘up and out’ approach, addressing both management and investors. ‘If you have your finger on the pulse, management is clearly going to be relying on you for market intelligence and insight,’ he noted.

As well as being an expert on your own firm, a deep understanding of your peers and your market will help to predict problems, manage issues and minimize surprises, said Craighead, adding that these ‘best practices’ remain the same whatever the economic situation.

In fact, Eva Chan, chairman of HKIRA and head of IR at CC Land Holdings, suggested IROs can use a downturn to their advantage to really show their worth. Even if investors are less interested, you need to ensure analysts keep their eyes on your company, she added.

Suki Wong, head of IR at Anta Sports Products, emphasized the importance of managing investor expectations. ‘Don’t over-promise – always tell the truth,’ she advised. She further advised against senior management using the share price as a benchmark for IR effectiveness.

‘Don’t allow anyone to take the stock price as a measurement,’ agreed Melten. ‘The stock price relies on many things you have no control over – like the financial crisis, for instance.’

Listen to the full webinar

The full recording of the webinar on proving the value of IR is now online at www.irmagazine.com/provingvaluewebinar. Log on and listen in to hear more from:

-Neil Stewart, editorial & research director, IR Magazine
-Tim Craighead, director of Asian research & senior gaming analyst, Bloomberg
-Beate Melten, director and global head of IR, Citi Depositary Receipt Services
-Suki Wong, head of IR, Anta Sports Products
-Eva Chan, chairman of HKIRA and head of IR, CC Land Holdings