Investor Relations
Investor Relations is a department within any medium or large scale company, whose primary role is to provide company’s financial information and performance to its shareholders.
It provides information about financial account and the company’s affairs which could directly affect buying or purchasing of company’s shares. This department acts as a bridge in accessing company management information and the market intelligence. It also answers all the questions of the potential shareholders and it plays vital role in connecting the shareholders to the company.Typically, an investor relation is a person or a department that reports to the treasurer or the financial officer.
Investor relation department has a strategic responsibility towards managing integrate finance, marketing, communication and other security compliances. This department develops two way communications between financial communities, company and other constituencies. In some companies, investor relations department is handled by corporate communication or public relation departments; hence, this department can also be referred as a financial communications department or financial public relations department. Labor Department of United States denotes this department as a specialty of public relation.
In most of the private companies, a dedicated IR Officer is assigned to handle press conferences, shareholder meetings, investor’s private meetings, annual reports and company’s website publication for investor relations. The IR Officer also transmits company policies for corporate social responsibility and corporate governance. The IR Officers and the company management discuss the worldwide interactive data such as electronic disclosures and XBRL (streaming data solution).
Role of Investor Relations:
The investor relations department should be aware of present and upcoming issues that the company might face particularly those related to fiduciary duties and organizational impact. It must be able to assess various stock trading patterns which the company might experience after the financial analysis reports are issued. This department works closely with the corporate security department to ensure that the shareholders are not affected on legal or regulatory issues.
The Sarbanes-Oxley Act:
In 2002, the Sarbanes-Oxley Act pointed out the importance of investor relations in terms of financial markets. This act ensures on public disclosure and accuracy of auditing for regulatory governance and corporate compliances; as well as it improves the corporate compliance and principally concerned with protecting investors. The act establishes the notable provisions for investor’s relations for:
- Enhances Financial Disclosures
- Accurate Financial Reports
- Real Time Disclosures
- Off Balance Sheet Disclosures
- Pro Forma Disclosures
- Management Assessments
- Corporate Financial Reports