1. 15. Investor Relations AL AKHAWAYN UNIVERSITY COMMUNICATIONS STUDIES
SCHOOL OF HUMANITIES AND SOCIAL SCIENCES
COMMUNICATIONS STUDIES
15. Investor Relations
Lecture by Dr. Mohammed Ibahrine
based on Seitel’s The Practice of Public Relations

2. Structure of the Lecture
1 Dealing with Investor
2 Investor Relations Philosophy
3 Investor Relations Activities
4 Dealing with Analysts
4.1 internet Investor Relations
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3. 1 Dealing with Investor
Individuals who specialize in investor or financial relations are the highest-paid professionals in the public relations filed
They should earn an MBA
A Master of Science in Finance
Chartered Financial Analyst designation (CFA)
In Europe and Asia, they should have Certified International Investment Analyst designation (CIIA)
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4. 1 Dealing with Investor
Another major component of keeping a company's health and wealth is communicating with shareholders and prospective investors
Investor relations (IR) is at the center of that process
The goal of IR is to combine the disciplines of communications and finance to portray a company’s prospects from an investment standpoint
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5. 1 Dealing with Investor Some key audiences are: Financial analysts
Individual and institutional investors
Shareholders
Prospective shareholders
Financial media
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6. 1 Dealing with Investor
Financial media
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7. 1 Dealing with Investor What about employees?
They increasingly become an important public
Because they have stock options
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8. 1 Dealing with Investor
Investors relations increased importance as the stock market of the late 1990s climbed ever higher
Investor relations was born in the mid-1930s
Investors are the owners of the company
When individuals buy shares of stock , they become owner in the particular corporation in which they have invested
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9. 1 Dealing with Investor What exactly is IR?
It is the effort to narrow the gab between the perception of a company and the reality
Helping the firm’s securities reach their appropriate market price
To do this, IR professionals must encourage stockholders to buy and hold company shares and persuade Wall Street financial analysts and institutions to take an interest
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10. 1 Dealing with Investor
A strong shareholder base is necessary to support management's objectives
Helping build a strong shareholder base is the duty of investor relations officers
Integrity and credibility must form the basis of professional IR practice
One way to win shareholder support is through timely and valuable communications
This is the job of investor relations
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11. 2 Investor Relations Philosophy
The essence of investor relations lies in a public company’s obligation to disclose information that may impact an investor's decision to buy, sell, or hold a stock
This means that a company must disclose information that is adjudged to be “material”
The legal standard of what is “material” is any fact that would be important to making an investment decision
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12. 2 Investor Relations Philosophy
Typical areas of expertise and work are the following:
1. Proposed mergers or acquisition
2. Change in dividend policy
3. Determination of earnings
4. Acquisition or loss of a significant business contract
5. Major management change
6. significant change in capital investment plan
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13. 2 Investor Relations Philosophy
Typical areas of expertise and work are the following:
7. Purchase or sale of a significant asset
8. incurring a significant debt or sale of a significant amount of equity securities
9. Pending significant legislation
10. A major discovery or invention
11. The marketing of significant new products
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14. 3 Investor Relations Activities
The typical corporate investor relations office is staffed by two or three individuals
Investor relations professional are responsible for a variety of communications activities:
Annual report. The annual report is a company’s key financial communications tool
The annual report generally include he following elements:
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15. 3 Investor Relations Activities
Annual report. The annual report is a company’s key financial communications tool
The annual report generally includes the following elements:
Company description:
Letter to shareholders
Financial review
Explanation and analysis
Management and marketing discussion
Graphics
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16. 3 Investor Relations Activities
1. Company description: This includes the company’s name, headquarters address, description of its overall business, and a summary of operation
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17. 3 Investor Relations Activities
2. Letter to shareholders: This incorporates a photo of the firm’s CEO, an account of last year's performance, and a forward-looking view of the industry, environment, and company’s prospects for the future
The best shareholder letters are those that are frank, fun, and straightforward
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18. 3 Investor Relations Activities
Financial review: In light of the U.S. Security Exchange Commission’s increased demand for financial disclosure
companies have expanded financial sections to include required filings and registration statement
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19. 3 Investor Relations Activities
Explanation and analysis: This complement to the financial review
is a general discussion of the factors influencing the financial results
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20. 3 Investor Relations Activities
Management and marketing discussion: The annual report has a narrative section that allows the company to expand on its products and prospects
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21. 3 Investor Relations Activities
Graphics: Photos and charts are critical to help bring to life the company and its performance
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22. 3 Investor Relations Activities
Annual report.
In recent years, as companies have suffered credibility problems
Some corporations have tried to break the traditional mold
They offer fresh and innovative annual reports
Google
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23. 3 Investor Relations Activities
2. Quarterly report.
Quarterly or interim reports are issued every quarter to keep shareholders abreast of corporate developments, particularly earnings, between annual reports
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24. 3 Investor Relations Activities
2. Quarterly report.
Companies compare their performance during the current quarter with their performance over the same period of time in the previous year
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25. 3 Investor Relations Activities
3. Annual meeting.
Once a year, the management of public companies is obligated to meet with the shareholders, in person, to discuss the firm
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26. 3 Investor Relations Activities
3. Annual meeting.
This annual “mating dance” between management and shareholders is greeted with fear and loathing by CEOs, particularly if the company has had problems
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27. 3 Investor Relations Activities
3. Annual meeting.
Shareholders are the “owners” of the company and deserve answers
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28. 3 Investor Relations Activities
3. Annual meeting.
In addition to question-and-answer sessions, the annual meeting also consists of
management speeches updating the shareholders on corporate performance
And stockholder voting on proposals spelled out in previously mailed proxy statements
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29. 3 Investor Relations Activities
4. Conference Call.
An increasing number of companies are releasing quarterly corporate earnings information with conference phone call to analysts, institutions, and individuals
Top management conducts the call, explains earning, and answers though questions
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30. 3 Investor Relations Activities
5. Media Contact and Monitoring.
Savvy investor relations specialists must
Keep investors aware of current market developments
They also keep current through regular contact with the monitoring of these important financial news outlets
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31. 3 Investor Relations Activities
6. Proxy Mailings.
Proxy is a technique/server used to cache information on a Web server and acts as an intermediary between a web client and that web
IPO Letter
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32. 3 Investor Relations Activities
6. Proxy Mailings.
Infrequently, corporations become involved in contentious shareholder issues that must be resolved by a vote of the shareholders
In these contexts-called- “proxy fights”- investor relations professionals participate in mailings to shareholders expressing management's point of view as to the direction of the vote
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33. 4 Dealing with Analysts
The principal investor relations contact is the stock market analyst
Analysts “analyze”
They are responsible for determining the value of a stock, based on its current valuation in the market and their expectations of the company’s future earning per share
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34. 4 Dealing with Analysts Analysts are divided into two types:
Sell-side analysts
Buy-side analysts
Sell-side analysts research specific stocks in particular industry groups and attempt to predict future earnings
In doing so, they place a recommendation on each stock to by, sell, or hold
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35. 4 Dealing with Analysts Analysts are divided into two types:
Sell-side analysts
Buy-side analysts
Buy-side analysts’ duty id to find stocks that their institutions can purchase and make a profit on
Because Buy-side analysts work for only one institutional entity and are “selling” nothing to the public
They have escaped government inquires unscathed
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36. 4 Dealing with Analysts 4.1 internet Investor Relations
Just as it has affected most areas of public relations work, the Internet has revoloutionzed investor relations
In the 21st century, companies must use the Internet to reach investors
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37. 4 Dealing with Analysts 4.1 internet Investor Relations
It has become expected of a forward-looking company to have a homepage providing investment information
A well-designed website provides service to investors and potential investors that they can receive nowhere else
Anywhere in the world, a potential investor can learn about the company as an investment
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38. 4 Dealing with Analysts 4.1 internet Investor Relations
The firm can better control its messages to investors through an integrated website than it can through randomly distributed news releases and investor packets
Today’s investor not only often invests by using online mechanism but also prefers to research personal investments on the Internet
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39. 4 Dealing with Analysts 4.1 internet Investor Relations
A strong investor website will include all of the staples of investor relations work:
News releases
SEC documents
Links to corporate filings
Executive profiles
Annual and quarterly reports
Stock price data
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40. Summary
The need for intelligent investor relations professionals, knowledgeable about both finance and communications- will increase over time
The area of investor relations will continue to develop as a fertile ground for public relations practitioners
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