Investor Relations (IR) is a strategic management responsibility that integrates strategy, finance, communication, marketing and compliance with corporate governance to enable the most effective interaction between a company, the financial community and other constituencies, to ultimately contribute to a company's securities achieving a fair valuation.
The term IR describes the department of a company devoted to handling inquiries from shareholders and investors, as well as others who might be interested in a company's stock or financial stability, as well as devoted to pro-actively positioning the company, its strategy and its investment proposition.
Consequences of equity financing for communication purposes
When a company has decided on equity financing instead of on taking on a loan in order to expand its business, this means that the investor(s) providing the equity financing need(s) to be kept informed on the development and strategic direction of the company. The manner in which information is disclosed to investors is firmly regulated for stock listed companies to ensure equal treatment of shareholders which need to be able to make their own trading decisions on the disclosed information. Consequently, the substance of information disclosed is – naturally – also of great importance.
Informing equity investors
Equity investors need to be informed on all matters pertaining to the company which may be considered or expected to be price-sensitive, by means of a public announcement (a press release). The content of the press release should provide the investors sufficient information to make a well-founded investment or trading decision.