Who do small-cap IROs report to?
The development of IR has involved the practice becoming more finance-focused. As the profession matured, the IR team drifted away from communications departments and became embedded in finance.
You can see the result in today’s reporting lines: around two thirds of IROs report to the chief finance officer, according to the IR Magazine Global Practice Report 2016, which was released at the end of last year.
Small-cap companies have resisted this trend, however. Only half of small-cap IROs report to the head of finance, finds the report, compared with 71 percent at large-cap companies and 76 percent at mega-caps.
So who do the other small-cap IROs report to? Slightly more than a third report to the CEO, and for the rest it is another member of senior management, such as the head of communications.
The findings are consistent with the view that, at smaller companies, the head of IR often wears multiple hats. He or she is therefore less likely to be viewed as part of the finance function and be managed by the CFO.
‘I enjoy working for smaller-sized issuers as you’re in much closer contact with the teams, the executive board and the activities taking place within the firm,’ Patrick Möller, Hamburg-based XING’s head of IR of nine years, who now boasts 17 years working at technology, media and telecommunications small caps, told IR Magazine last year.
‘You’re also much nearer to the people shaping the future of the company, be it in the form of product innovation or strategic decisions.’
Regional reporting lines
Looking at the results regionally, North America has seen a fall in the number of IROs reporting to the CEO. The figure was 47 percent in our 2015 report, but fell to 34 percent in the most recent study. Meanwhile, the number of IROs reporting to senior management members other than the CEO or CFO doubled from 7 percent to 14 percent.
Turning to Europe, a different picture emerges: here, our latest report finds that more small-cap IROs now report to the CFO than to the CEO. That’s following some big percentage-point swings between our 2015 and 2016 studies: the numbers reporting to the CFO rose 10 percentage points while those reporting to the CEO fell 9 percentage points.
In the Asia-Pacific region, there is a reversal of the change seen in Europe with the number of small-cap IROs reporting to the CFO falling by 10 percentage points, leaving just over a third reporting to the chief executive.
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