Investor relations definition

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What is Investor Relations?

Investor relations is a department within a publicly-held company that is responsible for keeping investors informed about activities within the business. The intent is to assist the investment community in making decisions about investing in the business.

Investor Relations Activities

The investor relations staff engages in a number of activities, which include the following:

  • Road shows. The investor relations staff routinely goes on road shows to meet with both existing and prospective investors, to talk about what the company is doing, its financial results, and why it is a good value proposition for them. These road shows may also be targeted at raising more money for the firm.

  • Institutional investor relations. The investor relations team will likely need to meet with institutional investors one-on-one, to answer more detailed questions about the company, in terms of its strategy, operations, and finances.

  • General communications. The investor relations team coordinates investor meetings, conference calls, press releases on financial matters, and briefings with outside analysts. A particularly important role is dealing with analysts, since their reports set expectations for the company’s share price with the investment community.

  • Web page updates. If the company has a web page devoted to investor relations, then the team updates it regularly with announcements, summaries of financial results, and perhaps a real-time feed that shows the company’s latest stock price.

  • Internal coordination of messaging. Investor relations personnel need to coordinate their activities and public statements with the accounting department, legal department, public relations department, and senior management team, to ensure that they do not stray from official company positions, and do not discuss any non-public information with outsiders. In the latter case, the inadvertent release of non-public information will require an immediate press release containing this information, so that the non-public information is made available to the investment community at large.

Related AccountingTools Courses

Investor Relations Guidebook

Public Company Accounting and Finance

When to Create an Investor Relations Department

The investor relations department is usually formed prior to a company’s initial public offering, when it can begin to develop a consistent message about the purpose of the company. It can then begin disseminating information about the company to investors, which continues for as long as the entity is publicly held.