IHS Markit analyzed how Investor Relations can be a competitive advantage for a public company similar to great products, talent, science, assets or operations.
The analysis focuses on best-in-class IR programs, identifying what makes these teams stand above the rest, quantifying their success, and understanding how companies can maximize valuation, thereby creating a lower cost of capital and a competitive business advantage.
The key findings of the study are:
- Highly effective IR maximizes valuation by supporting a premium of 15% and lowering volatility by 5%, as measured by Beta. (Conversely, ineffective IR leads to a discounted valuation of 10% or more.)
- Valuation has a direct impact on the company's access to (and cost of) capital, which contributes significantly to sustainable business growth, particularly versus lesser competitors.
- These 2 factors taken together provide companies with a significant competitive advantage over time, enabling the firm to invest in business growth for the future. Companies with highly ranked investor relations programs benefit from an optimal valuation and reduced cost of capital.
