Investor relations, shortly IR, is a department or division in a company that is often public. Investor relations can also be activities linked to the management of investors in a company. This is often the case in a start-up with initial investors. The investor relations department has the duty to provide investors or potential investors with an accurate account of company affairs. This will help private and institutional investors to make informed decisions on whether to invest or not.
Inside big, public companies, the investor relations department is often part of the public relations department. This is the case because the information giving to the press can influence the stock trading and the investors. Some news about a company can have significant impact on financial results. For smaller companies, the Chief Financial Officer is often the person responsible for Investor Relations. The IR team is responsible for communicating information with investors, shareholders, government organizations and the financial world to ensure that the company is being traded fairly and to its value.
In the case of big public companies, the investor relations department is created during the IPO phase. This is the best timing because at this moment, potential investors are trying to access financial statements, critical information about the company to get a sense of the potential of their investment. The investor relation department makes the communication easier and they can conduct internal investigations to get qualitative or quantitative data for the investors. This is a separate department because the amount of information required can be overwhelming and a CFO would dedicate it’s entire time to be able to answer to these needs.
IR teams are especially busy when releasing financial data, be it per month or per quarter, about the company. They also need to organise press briefings, annual general meetings, conferences to inform about earnings, share, stock, current company focus and future developments. IR teams have also to publish specialised reports and documents to the financial community in order for them to get the right information. IR departments have the responsibility to communicate and exchange with investment analysts and experts that provide public opinion on the company.