Is investor relations responsible for the share price?
9. Juli 2015
The short answer is no. But there’s more to it than that
There are simply too many factors involved in the determination of a company’s share price – from macroeconomics to which sectors are in fashion – for responsibility to fall solely on any one department.
While investor relations might not be responsible for pushing up the share price, there are elements of a company’s valuation that are of course impacted by IR.
‘If you’re doing best practice investor relations, you really need to understand the company’s investment proposition and what its future prospects are. And you need to be able to communicate that really well to the widest possible pool of potential investors,’ says Sue Scholes, chair of the UK’s IR Society. ‘And if you do that, you can make sure your company is appropriately valued – which is not necessarily quite the same as trying to maximize the share price.’
If you get things right in terms of trust, reliability and transparency, you will develop the right reputation – ‘and that can help your comparative valuation,’ she says.
This was a subject raised at the IR Society’s annual conference this week, in fact, highlighting the value IR can add – during good and bad times. ‘Even if you need to make a profit warning for example, a company that’s worked well at its IR and is trusted and has a good reputation is going to be hit less badly than a company where these things haven’t been in place before bad news,’ adds Scholes.
Sofia El Boury, head of IR at First Gulf Bank and Middle East Investor Relations Society board member, agrees. ‘It would not be fair to assume that IR is fully responsible for a company’s share price which is influenced by a myriad of exogenous and endogenous factors,’ she says.
‘What IR is responsible for is consistently analyzing and identifying which factors prevent the shares from reaching fair value. Based on this, IR efforts are fine-tuned accordingly in order to remove selected discounts and close valuation gaps whenever possible.’ …
Hier geht's zum vollständigen Artikel von Garnet Roach, erschienen im IR Magazine.