Influence of the growing ETF industry on active investor relations work 35Fundamentals of investor relations 3 Fundamentals of investor relations The following section deals with the area of inves tor relations After a definition and classification in the corporate structure objectives and different target groups of IR are described followed by an overview of IR tasks and measures 3 1 Definition of investor relations Investor Relations IR describes the targeted systematic and continuous primarily capital mar ket oriented financial communication with cur rent and potential shareholders equity IR lend ers fixed income IR and corresponding opinion leaders financial analysts rating agencies ana lysts advisors about the company s past current and expected future business taking into account the sector to which the company belongs and the overall economic context Streuer 2004 p 6 IR acts as an interface for financial communica tion between a listed company and the financial community whereupon the company s owners make up the main target group of this purposeful communication A high level of understanding of capital market processes especially on the stock exchange is required to manage IR activities All gäuer and Larisch 2011 p 243 Depending on the definition of IR financial and equity marketing is considered as a part of it Theilen 2008 p 28 3 1 1 Historical development of IR IR as an independent organizational unit in its own right detached from public relations is a rel atively young communication discipline and was not introduced in Germany until the end of the 1980s Allgäuer and Larisch 2011 p 243 In 1994 only 10 of German companies had their own IR department Streuer 2004 p 9 Similar to the development of ETFs described in chapter 2 2 2 the US were one step ahead There active investor communication was already well developed in the 1950s and the term investor relations was first mentioned in1953 by the company General Elec tric The IPO of the Deutsche Telekom AG in 1996 is considered as the birth of IR as an institution in Germany Theilen 2008 p 28 One important driver for the growing importance of IR was the increasing influence of institutional investors in the 80s triggered by the movement to privatize national industry Frankel Lumley and Hennessey 2006 p 1 There is no German equivalent for the term IR until today as the term was simply taken over from the English language Schnorrenberg 2008 p 11 3 1 2 IR in the corporate structure Today IR functions as a separate communications department with independent IR activities All gäuer and Larisch 2011 p 243 In the corporate structure it is directly subordinated to the CFO or CEO as a staff department Schnorrenberg 2008 p 14 IR is therefore involved at an early stage in all decisions affecting the company in relation to the capital market It is not explicitly prescribed how IR is defined as an independent organiza tional unit Besides the described staff unit cen tral units or completely independent business units are also possible types of organization of the IR department Köhler 2015 p 188 3 2 Objectives and target groups of investor relations 3 2 1 Objectives of investor relations The overall objective in financial communication is to achieve a long term maximum fair valuation of the share price Theilen 2008 p 41 In addi tion IR aims to realize a steady slowly increasing share performance without high fluctuations All gäuer and Larisch 2011 p 244 to reach a sustain able stabilization of the share price trend One major aim of IR is to provide the financial community with information that can be used to assess the development and value of the com pany This information is communicated through legally required publications such as the annual report as well as through numerous other means of communication like presentations or meetings Shareholders are then able to make an investment decision based on provided mainly economic

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