Good public relations use research, strategy, and creativity to capture the attention and communicate a specific message to target audiences. Investor relations is quite similar in its approach – using research and strategy to direct a message to a targeted audience of informed investors.
As a corporate marketing activity, investor relations combines the disciplines of communication and finance to create understanding, interest, awareness, and commitment within the investment community. Creating a dynamic exchange between a corporation and institutional, individual, or potential shareholders carries the corporate message beyond the pages of the annual report.
Such communication is a potent management tool. It controls the disparity between the expectations of management and those of the financial community. It presents the company, its products and management, financial goals and growth potential to members of the investing community with like goals searching for the right investment opportunity. By shaping, informing and working with the investing community, investor relations can maximize the company’s total value relative to that of the overall market and, in turn, reduce the company’s cost of capital.