5 COMMON MYTHS ABOUT INVESTOR RELATIONS
Working in investor relations (IR) provides well-rounded communications professionals the opportunity to flex their financial knowledge muscles in a fast-paced environment. However, as more corporations embrace the role that IR plays within the company, there are still many misconceptions about what investor relations professionals actually do.
Below, we identify and debunk the most common myths about working in IR:
Myth 1: Investor Relations is Stock Promotion
This couldn’t be further from the truth! Investor relations is anchored in storytelling and finding ways to disseminate the right information, at the right time, and to the right audience. If an investor relations firm guarantees you instant movement in your company’s stock price, run away fast! A good investor relations officer (IRO) is worth their weight in gold and will focus on long term shareholder value by finding effective ways to communicate relevant facts and company fundamentals.
Myth 2: Only Large Corporations Need an Investor Relations Program
While it’s true that the size and scope of an IR team changes as a company grows, IROs play an outsized role for new issuers and small cap companies, especially when those companies have little to no capital markets experience. Whether you’re looking to create visibility, manage expectations, build relationships, or get more creative with messaging, an IR team is essential to companies of all sizes. IROs play a key role in ensuring messaging is disseminated in a manner compliant with all regulations.
Myth 3: Having an IR Team Replaces the Need for a CEO/CFO to Meet with Investors
While the IR team may ease some of the burden on the C-suite to communicate with investors, making your management team available to the public is still one of the most effective ways to build trust. Investors will certainly raise eyebrows if the C-suite aren’t making themselves available. Today’s modern CEOs and CFOs must be just as comfortable headlining quarterly employee meetings as they are speaking directly to investors to communicate the company’s values and direction. IROs need to work with the C-suite to not only craft a compelling message, but support C-suites in their delivery, from public speaking to media training.
Myth 4: The More Press Releases, the Higher the Stock Price
It’s been said repeatedly, but quality beats quantity. With social media and several other digital channels available, it’s never been easier to get your news out there. However, every other company has access to the same channels, and investors are being overloaded with unnecessary communications. Media algorithms are becoming increasingly effective at filtering out irrelevant news, so put your energy into crafting timely, relevant communications on the most effective platforms that are likely to spur engagement. Don’t saturate your social media platforms with unimportant messages. As a Globe and Mail reporter stated to one of us years ago, “Spam press releases make us wade through lots of irrelevant information, making us want ignore a company completely.”
Check out this article by our Principal & Co-founder, Alyssa, on ‘How your press releases are influencing trading patterns’
Myth 5: “I have an offer you can’t refuse”
Alyssa has said time and time again, “We are not the mob.” Many believe that by hiring an IRO, that investors and journalists will begin falling from the sky. Guaranteed media coverage is called advertising. If any IR firm swears that they “know a guy, who knows a guy, who has a guy”, it might be time to run for the hills. As we’ve seen, these backroom deals rarely end in a way that is beneficial for the client, or meaningful for the investor. While we utilize our extensive list of contacts to get us in the room, IR is not a game of “who do you know”. The most effective IR teams can create a story so captivating, it catches potential investors’ attention, even those investors not aware of the organization beforehand.
