The Changing World of Investor Relations

The role of the investor relations officer (IRO) has significantly changed over the past few decades. Historically, an IRO was looked at as a communications specialist but as public companies have evolved so has the role. Today, an IRO is not only involved in communication but often holds a seat at the decision making table with input into company strategy. Engaging IRO’s in competitive analysis, corporate sustainability efforts, compliance and of course corporate strategy allow companies to leverage the vast wealth of knowledge a strong IRO has acquired through discussions with the street.

Historically, investor relations was a reactive industry. If there were share fluctuations, activist shareholders or negative industry sentiment, an IRO would have to wait until there was a market reaction to address situations that arose. As the industry changes, so do the tactics of IRO’s. In today’s world, IRO’s are able to use technology to help predict events before they arise. This can often change the role from reactive to proactive. Looking forward, it appears the biggest evolution in the investor relations industry is upon us. As data analytics are transforming operational and strategic initiatives, some companies are successfully applying these analytics to help strengthen their investor relations efforts.

If an IRO can better understand what investors are looking at, they can then tailor investor communications pieces to better target their ideal shareholder. If an IRO can determine and measure interest from specific regions, they can improve road shows and possibly bring on new institutions and analysts that previously were not on their radar. At the end of the day, additional data improves an IRO’s ability to understand their current and prospective shareholder base while at the same time providing actionable intelligence to continually improve investor relations communications.

The role of an IRO, as markets have becoming increasingly quick and decreasingly transparent, is to understand “what is driving my stock”. By using new technologies, such as investor relations data analytics, IRO’s can continue to improve their functions. New technologies are transforming IR data from qualitative to quantitative which in turn improves the entire industry. As we look towards the future of investor relations, there is no doubt analytics will become ever more present by providing insight to IRO’s.

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