Thoughts on the Value and Contributions Made By Investor Relations

With our final paper about Investor Relations issues being due today, I spent a lot of time over break focusing on the different ways to measure the effectiveness and value of investor relations to a company. Numerous journals online were able to help me in seeing different ways companies can measure that having an IR department is worth the time and money.

The first article summarized was by Alexander Laskin and commented on how people thought valuation, analyst coverage, trading volume and relationship building. The people responding to these topics concluded that value of Investor Relations and most closely related to a company's need to form strong relationships with those that our investing within the organization.

A second article that helped me to understand the need for investor relations, was a study of the companies that have been awarded the title of the best Investor Relations departments. The companies that had received this award generally had higher abnormal stock price and an increased availability and desire for the companies stock. This information focused more on the quantitative contributions of the relationships between companies and their investors.

The third article focused on firms ability to measure IR's effectiveness when they were to look at their outputs and outcomes. Outputs would include number of analyst reports about the company, quality of analyst coverage and the type of media coverage the corporation is receiving. Outcomes are more closely related to the numbers in a fair market price, trading volume and P/E ratio.

Each of these articles had a different focus about the ways in which IR provides values, yet each one recognized the idea that an effective investor relations division has a positive impact on the company. This paper also helped me to further understand the role that IR professionals play in keeping up with disclosure regulations, along with making sure investors understand the history, mission and goals of the companies they are buying stock from.

The writing of this paper was very interesting because I was able to view what other bloggers were saying on the topic. While I understand that it is hard to measure the value of such a new profession, I know there is a clear use for Investor Relations professionals within the market.