What PR Professionals Should Know about Investor Relations (IR)

By Andrew Law, Schwartz Communications, Inc.

Many PR professionals interact with IR, some even take on IR duties, but how many of us know the ins and outs of our sister profession? Last week's panel on Investor Relations 101 for PR Professionals helped us learn more. The panel discussion was led by experienced and insightful experts in the industry:

- Jim Buckley, Executive Vice President, and Partner, Sharon Merrill Associates- Andy Kramer, Director of Investor Relations, Interactive Data Corporation (NYSE: IDC) and Director, Board of Directors, National Investor Relations Institute (NIRI)- Javier Jimenez, Partner, Tatum LLC, and former CFO, Abiomed- Matt Kelly, Editor-in-Chief, Compliance Week 

In the discussion, we learned some interesting parallels between how PR and IR professionals operate:   

 - IR is a communications field just like PR. As in PR, the IR profession involves telling stories. Its stories are about growth - how a company will grow and make money. IR professionals tell the earnings and corporate story to drive valuation. But unlike PR, all stories must be grounded in financial information. 

 - Several key IR tenants are to manage expectations appropriately, be transparent, establish credibility and believability, communicate on a consistent basis, and establish a dedicated team to respond to a crisis. Sounds very familiar! 

 - We all know many traditional publications are reducing editorial staffs. Likewise, it was estimated that there are less than half the sell-side analysts today as there were in 2000.   

But also, there are different viewpoints to take into account between IR and PR:  

- Wall Street often dislikes "unique" companies, in part because there is nothing they can compare them to for financial modeling purposes. In PR, we often like to tell the "first/best/only" story. To be compatible with IR goals, it is important to position companies within a market or industry to which Wall Street can relate. 

- Because IR deals with sensitive financial information, IR professionals and executives must be careful to avoid fines or even jail time! In the last months, there have been the first two regulatory fines in several years for companies failing to follow Reg FD - the SEC regulation prohibiting selective disclosure of material information. It was even recommended that before IPOs, all of a company's employees be trained to not disclose sensitive information. 

- Even though the SEC has no specific rule on quiet periods, from an IR perspective, many companies take precautions and self-impose quiet periods, for example in the lead up to quarter-end up through the earnings release being issued. 

- For IR, goals include maximizing stock valuation (not controlling it but maximizing it!) and liquidity, while decreasing volatility.  

Importantly, IR and PR can benefit one another - many investors like to invest in things they read about!