Investor Relations: Managing Constitiency Relationship, Enhancing Corporate Valuation!!

Investors Relations (IR) is a strategic function of a quoted company comprising of broad range of activities that help the entity communicate effectively with its interconnected and multidimensional constituency of current & potential investors, financial community, regulators, media, legislators, consumers and society as a whole.
One of the key objectives of an IR program is to keep the market informed about corporate developments and external environment that may affect the share price of an entity. The wider objective is to keep the audience aware of the current and future developments so that well informed investment decisions can be made. The ultimate objective for the entity is to accurately represent itself hence achieving a fair market valuation resulting into lowering the cost of capital. One of the most critical things for a quoted company is to develop a strong support base, retain it and expand the same.
Companies now understand that the shareholders are the fundamental building blocks of their ownerships, and it is these shareholders who place a higher value on the company's stock. At the same time it is important for companies to cater to the needs of other constituents that equally contribute to enhancing the corporate support base. To achieve this companies invest a great deal of time and resources to convert their common investors and other stakeholders into an 'understanding', 'supportive', and 'well informed' group.
Good companies have entire departments and teams dedicated to manage the integrated investor relations communication through multiple of tools including face to face interactions, websites, pod cast, social networks, blogs, analyst briefings, press conferences, and press releases. The IR function is responsible for timely and accurate dissemination of sensitive, important, strategic information to the investors required to ensure that the market place remains a fair and level playing field for all participants.
The information may be financial or non financial in nature including details of earnings, important investment decisions, product or market diversification, regulatory changes, changes in key management, and sustainable development. Companies also get feedback through IR function which helps them in corporate planning and devising strategies. Another way of putting it is, that in order to achieve true valuation companies need to communicate on who they are; what do they do; and where they are going - while realigning themselves in response to the expectation of valid constituents.
Traditionally investor relations focused only on release of financial information; however the information domain has now become wider covering almost every piece of information as everything a company does either immediately or eventually has a financial impact and affects the bottom line. This sharing of information is also critical in the wake of increased regulatory compliance for ensuring transparency, increased competition, socially responsible investing behaviours, and dynamic business environment. The IR function thus has become critical in nature and investor relation services are much needed to act as a bridge between investors and the company. Not only this, IR possesses the competence to maintain a robust relationship with all stakeholders.
To highlight and focus on recent evolutions in Investor Relations in Pakistan. South Asian Federation of Exchanges (SAFE) is organising a one day training seminar on July 29th, 2011, at Sheraton Hotel, Karachi. The seminar is targeted at both the senior and middle level management across the various departments of corporations to introduce the significant elements and requirements of a successful Investor Relations program. SAFE is an initiative towards regional and global integration of the domestic capital markets of the region. It's a SAARC recognised non-profit association and an affiliate of the World Federation of Exchanges with an objective to promote the growth of the securities market in the region. The aim of this one day course is to build an understanding of the new challenges being faced by corporations in creating successful investor relations.
The course will emphasise on the regulations concerning the structure, governance and behaviour of listed companies, in particular disclosures of information, legal requirements of the financial calendar, types of stakeholders, role of stock exchanges, sustainable investing behaviours, required ethical and professional standards of the IR department. The result of effective investor relations off course is to enable the management to not only communicate on company's financial strategy, but also on a broader strategic direction of the corporation to ensure a cohesive and positive image of the company. The seminar will also discuss the upcoming technological trends in the Investor Relations field as well as newly developed mediums of electronic disclosures.
The writer is Chief Executive of CAMCO (Pvt) Limited, a corporate member of Islamabad Stock Exchange (G) Limited (ISE). She is presently serving as an elected Director on the Board of ISE. She is also working as Director Business Advisory Services at Khalid Majid Rehman Chartered Accountants. She holds a masters degree in business administration from Lahore University of Management Sciences, LLB (Honours) from University of London and ACCA. ayla.majidkmr.com.pk
Seminar on July 29, 2011 at Sheraton Hotel, Karachi.