Why do investors need to know what IR is?

When you decide to buy shares of a company, that company has a team responsible for communicating information to investors, called Investor Relations or IR. Understanding the role of this department will help you make smarter investment decisions.

How is IR different from Public Relations?

Many people confuse Investor Relations with PR(Public Relations). Although the names sound similar, their core functions are very different.

Public Relations focuses on building a positive image among the general public, while Investor Relations has a specific goal of providing financial information and operational results to investors and analysts. IR’s work combines finance, marketing, communication, and market knowledge.

The ultimate goal of IR is to ensure that the company’s securities are fairly valued in the market.

What are the responsibilities of IR?

IR is not just a communication officer but a department responsible for multiple areas.

1. Market communication

The IR team acts as a bridge between company management, legal team, accounting, and the capital markets. They monitor market changes, gather information of interest to investors, and report back to management to help the company improve its operational strategies.

IR also coordinates with the marketing department to ensure that all messages and activities align with the company’s strategy.

2. Communication with analysts and investors

The main duty of IR is to work with investment analysts, who play a key role in advising investors. Analysts request financial reports and operational documents, then share their opinions with the investment community.

IR also communicates with current and potential investors to provide up-to-date information, answer questions, and generate interest in the company.

3. Managing financial information

The IR team must understand regulations related to disclosure and advise the company on what can and cannot be disclosed. This work is crucial for maintaining the company’s credibility.

Why is investor relations important to a company?

Reduces financing costs

When IR performs well, investors better understand the company’s value, leading to faster investment decisions. As a result, the company can reduce the cost of raising capital through securities.

Stock prices reflect true value

IR experts help management tell the company’s story effectively, whether during mergers and acquisitions or public offerings (IPO). After entering the stock exchange, IR can update information whenever there is business news.

Promotes transparency

Investor Relations helps the company demonstrate transparency by presenting accurate and timely information about operational results, strategic positions, and other key developments. This increases investor trust.

Expands the investor base

An effective IR team can help attract new investors and new capital. It also enhances stock liquidity, making it easier for investors to buy and sell.

Main goals of investor relations

1. Build and maintain confidence

IR aims to increase and sustain investor confidence by providing accurate and timely information. Stakeholders want to know that the company is financially healthy, and IR is the communicator of this news.

2. Communicate the company’s strategy

Investors need to understand the company’s long-term plans, growth targets, and how they will achieve those goals. IR helps the public and investment community understand the company’s sustainable value.

3. Comply with regulations

The IR team must ensure the company adheres to laws, regulations, and ethical standards. Compliance helps increase access to capital markets and enhances the company’s reputation.

4. Serve as a bridge

Investor Relations acts as a liaison between company management and investors. Investors can access information and answers from the company through IR, and the company receives feedback from the market.

How does IR work in practice?

Main processes

1. Set goals and strategies - IR team collaborates with management to determine what to communicate.
2. Plan communication channels - Choose methods and tools to reach investors.
3. Appoint spokesperson - Usually the CEO or senior executives.
4. Establish disclosure plans - Schedule for releasing information according to a calendar.

Typical IR materials

• Company mission and values
• Annual reports and financial data
• Messages from senior management
• Organizational structure and shareholder analysis
• Industry and business environment information
• Calendar of key financial events

Qualities of a good investor relations professional

Those working in IR must possess specific qualities:

Financial understanding

IR experts need to understand the company’s financial statements, ratios, and market trends.

Data analysis skills

Investor relations professionals must be able to read, interpret, and present complex data in an understandable way.

Excellent communication skills

The ability to explain complex concepts clearly and concisely is essential. Investors want understandable information, not technical jargon.

Attention to detail

Financial data requires high accuracy. Small errors can influence investor decisions.

Leadership ability

IR teams work with multiple internal departments, so leadership skills are necessary to coordinate effectively.

The deeper meaning of investor relations

Publicly listed companies can establish an IR department before going public. The role of this department is not overlooked. Although daily IR activities may seem like data transmission, its role is vital to the company’s success.

When a company fully leverages IR, it can better access capital markets, reduce funding costs, and increase stock liquidity. Investing in a skilled IR team is an investment in the company’s future.

Therefore, Investor Relations is not just a support department but a key part of the business strategy for any company seeking sustainable growth in the capital markets.