What Makes for a Successful Investor Relations Program?

By Dennis Walsh, Senior Consultant & Director of Social Media

In many of the StreetScope® perception audits we conduct, we often inquire about what makes a successful investor relations program.  Is the Street satisfied with the level of outreach?  Is there something specifically a firm can do to enhance its communications?  Being the investor relations enthusiast that I am, I’m always hoping to discover an innovative idea that we have yet to implement. 

However, more often than not, the responses are all pretty simple.  Wall Street wants access to management.  They want informative answers to their questions.  Many even want an investor day that describes the company’s long-term growth strategy.  So old-fashioned (I jest)!  What about having an active Twitter/StockTwits account (follow me) or Facebook page, a cool management video or an interactive annual report?

Recently, we surveyed a sampling of buy-siders, asking “What qualities and activities do you believe are most important to the success of a company’s investor relations program?”  The word cloud below depicts the frequency of the various responses received.  Availability was the clear winner.Echoing the responses to our previous perception studies, Wall Street believes that in order for a company to have a successful IR program, management must be accessible and the IR team should be responsive and well-informed. 

Here are some excerpts from the responses:

 “Very clear and honest communication with investors about the long-term fundamental outlook for the company’s business.” – buy-side portfolio manager ($129B AUM) 

“Honesty, availability, consistency are primary considerations.” – buy-side director of research ($196M AUM)

“Direct answers that inform the investor about the intricacies of the business…” – buy-side analyst ($26B AUM)

“IR people who return phone calls promptly, know the business and answer questions in a straightforward manner.” – buy-side CIO ($78M AUM)

“Provide investors with a compelling reason to own the stock, not just convey a lot of data that one can easily refer to on the website or annual report.  Be upfront if there is bad news on the horizon and not try to gloss over negative information.” – buy-side portfolio manager ($375M AUM)

“Open communication and an update of all long term goals on an annual basis at a setting hosted by the company…” – buy-side CIO ($180M AUM)

Everyone in the IR field today knows that corporate access has grown significantly in the past few years and that  management should be out speaking with investors in good times and bad.  And, returning phone calls and providing informative answers to shareholder questions should be a no-brainer.

But what about all this other stuff we hear about?  Every day, someone (myself included) is touting the benefits of using social media for investor relations; effectively using video to communicate messages to shareholders; expanded website disclosure, etc.  In fact, one respondent referenced the company website as a factor:

“A well organized website.” – buy-side analyst ($4.2B AUM)

So, are these new trends in interactive communications not important to add to your IR program?  While we continue to hear that Wall Street is resistant to social media, they are still worth your attention, but you must remember to not lose focus on the foundation of investor relations: being accessible to shareholders and effectively communicating corporate messages in a timely manner.  Many of the new interactive tools available today are a great way to support your IR program and enhance your team’s efforts to be more available, responsive, transparent and informative.  Today, you must enable your audience to receive news in the manner in which they choose, otherwise, they may not get it at all.  Now, if you’ll excuse me, I’ve got to go finish fulfilling requests for printed investor kits before the post-office closes.

Dennis Walsh is Senior Consultant & Director of Social Media at Sharon MerrillHe counsels clients on a broad array of investor relations and corporate communications issues such as market research, competitive intelligence, earnings announcements, investor targeting, road show planning and social media.

6 Comments

Filed under Investor Relations, Social Media

6 responses to “What Makes for a Successful Investor Relations Program?

  1. Your word cloud is extremely revealing. Well done.

  2. Pingback: Trending on Twitter: What Q4 is reading & sharing on social networks – week of August 8, 2011 | Q4 Blog

  3. Great article as Director, IR for NYSE:PRO I could not agree more.
    “Wall Street believes that in order for a company to have a successful IR program, management must be accessible and the IR team should be responsive and well-informed.”

  4. My sense is that senior management should put investor relations alongside their strategic and operational responsibilities. I also have a vision of a company that integrates it brand – promise to the consumer – with it’s culture – promise to the employee – with it’s investor relations – promise to the owners. Some of the best management teams get it, but it’s hard to make it happen.

  5. Thanks for this awesome blog.

  6. David Tayabji

    This is really a great topic. How can one be upfront about “upcoming negative news” without running into fair disclosure regs? Unless of course, the client is referring to getting the news out in the public domain. In that case, who makes that decision? Very senior management, lawyers, IR team or do all of the above have a vote? Per Mark Chizlett’s comments, i’m curious if there is more frustration/stress or satisfaction/reward in the IR world as to it’s influence within it’s corporation? Thank you.

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