What Are Investor Relations (IR)?
Investor relations (IR) is a key department in many medium-to-large public companies. Investor relations provides investors with an accurate account of company affairs. This helps private and institutional investors make informed decisions on whether to invest in the company.
Understanding Investor Relations (IR)
Investor relations ensures that a company’s publicly traded stock is being fairly traded through the dissemination of key information that allows investors to determine whether a company is a good investment for their needs. IR departments are sub-departments of public relations (PR) departments and work to communicate with investors, shareholders, government organizations, and the overall financial community.
Companies normally start building their IR departments before going public. During this pre-initial public offering (IPO) phase, IR departments can help establish corporate governance, conduct internal financial audits, and start communicating with potential IPO investors.
For example, when a company goes on an IPO roadshow, it is common for some institutional investors to become interested in the company as an investment vehicle. Once interested, institutional investors require detailed information about the company, both qualitative and quantitative. To obtain this information, the company’s IR department is called upon to provide a description of its products and services, financial statements, financial statistics, and an overview of the company’s organizational structure.