Investor relations or public relations?

Some people think investor relations and public relations are completely different. We examine the arguments.
THE free encyclopaedia states the following: Public relations (PR) means the managing of outside communication of an organisation or business to create and maintain a positive image. PR involves popularising successes, downplaying failures, announcing changes, and many other activities.
Investor relations (IR) on the other hand, is a set of activities which relates to the ways in which a company discloses information required for regulatory compliance and good investment judgment to bond and/or shareholders and the wider financial markets.
So, is IR an element of corporate PR? Companies commonly employ PR to support their sales and marketing efforts and explain products and services to potential customers.
PR is synonymous with corporate brand building and managing corporate image. Relations with government involve lobbying and other PR strategies. Recruitment efforts and occasionally, internal employee relations, can have PR features. Corporate social responsibility programmes are often accompanied by a PR campaign. These are the meat and drink of the corporate communications department.
While an effective IR programme may be seen as part of establishing corporate reputation, it is not part of company “branding” or other promotional activities generally characterised as PR.
IR is about fairly disseminating company fundamentals to specific stakeholder segments, more than it is about marketing or promoting a “corporate image”.
IR is where the company explains its financial performance and prospects, and describes its business plans, strategies and targets to shareholders and potential investors and the financial community in general.
Why? So investors can make properly informed decisions and others can have an accurate view of the company. It is not to inflate the share price, but to secure a loyal, long-term shareholder base, the favourable regard of the financial community and ultimately, a lower cost of capital.
IR communications target investors and fund managers, and those who influence investor opinion, such as analysts and the media. Broader investor opinion is engaged through the company website, especially the IR pages, and through the financial press.
Does this make IR and corporate PR separate disciplines? Not quite! True, the IR professional tends to have a background in business, finance or accounting. Mass communications or psychology graduates are seldom found here. He may have experience in investment management or as an analyst, and understand how capital markets work. He will have sound knowledge of the company, its activities and prospects, and the ability to translate complex corporate data into an understandable form.
The IR professional will also develop the key IR messages, and convey them effectively, utilising a variety of communications channels. Will he do this in isolation from corporate communications?
The fact is, some work of corporate communications impacts on the IR programme, and some elements of the IR programme affect the corporate PR campaign. For instance, being well regarded by the financial community is an IR goal, but it also enhances corporate reputation.
Often the PR and IR units use the same communication channels and apply many of the same techniques. Ultimately, both operations exist to benefit the company. It makes sense they work in tandem, avoiding duplication where possible.
When companies formulate their IR programmes, these considerations are vital if effective overall corporate communications are to exist. A good IR policy will outline in detail the areas of responsibility for different aspects of the company’s financial communications.
For instance, utilising event management skills in corporate communications contributes to the success of analyst/media briefings and the AGM, while the IR professional will contribute his skills to the writing of the annual report.
At this juncture, it’s best to conclude by stating what IR is NOT:
The newest thing on IR is the launch of the Malaysian Investor Relations Association and the launch of the IR manual. Go to www.mira.com.my.


(i>This article is contributed by David Berry, managing director of Columbus Circle Governance Sdn Bhd.