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Article
Publication date: 1 March 2004

Richard R. Dolphin

This paper reports an empirical study conducted in British organisations focussing on the role of investor relations as part of a co‐ordinated marketing communications

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6875

Abstract

This paper reports an empirical study conducted in British organisations focussing on the role of investor relations as part of a co‐ordinated marketing communications strategy. Consequently this study considers the greatly neglected research area of the management of relationships between national and international organisations and both investors and those others who might consider themselves significant financial stakeholders. It examines the organisational role of investor relations within a co‐ordinated communication programme and suggests that communication with financial stakeholders has a significant role to play as part of a developed corporate communication strategy.

Details

Corporate Communications: An International Journal, vol. 9 no. 1
Type: Research Article
ISSN: 1356-3289

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Article
Publication date: 15 May 2007

Harold Hassink, Laury Bollen and Michiel Steggink

In previous studies it remains unclear whether the internet is an effective mechanism for developing a symmetrical and interactive communications process that is initiated…

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1300

Abstract

Purpose

In previous studies it remains unclear whether the internet is an effective mechanism for developing a symmetrical and interactive communications process that is initiated by the investor rather than the company. The purpose of this paper is to study the effectiveness of the internet to act as a mechanism to achieve a more interactive communication between companies and investors.

Design/methodology/approach

A “mystery investor” approach is used to test whether companies reply to e‐mails from investors. Content analysis was used to study the responsiveness, timeliness and relevance of the answers.

Findings

The quality of symmetrical communication (in terms of responsiveness and relevance) appears relatively low. Companies with high‐quality investor relations (IR) web sites do not handle e‐mails more effectively. Therefore, high‐quality asymmetrical communication between company and their investors not automatically associated with a high‐quality symmetrical type of communication.

Practical implications

Companies that provide e‐mail facilities for investors create the impression that they welcome communications with investors. However, if companies fail to handle incoming e‐mails from investors quickly and correctly, they create feelings of dissatisfaction. As a result e‐mail facilities on web sites are counter‐productive and hamper the creation of good relationships with investors. These results emphasize the need for better internal routing, better instructions and specific training programmes for IR staff.

Originality/value

The paper provides original evidence on the potential of the internet to enhance symmetrical communication between companies and their investors. This paper contributes to a better understanding of the way the internet can be used by IR departments to enhance the communications with investors.

Details

Corporate Communications: An International Journal, vol. 12 no. 2
Type: Research Article
ISSN: 1356-3289

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Article
Publication date: 3 August 2015

Alexandra Moritz, Joern Block and Eva Lutz

This study’s aim is to investigate the role of investor communication in equity-based crowdfunding. The study explores whether and how investor communication can reduce…

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4956

Abstract

Purpose

This study’s aim is to investigate the role of investor communication in equity-based crowdfunding. The study explores whether and how investor communication can reduce information asymmetries between investors and new ventures in equity-based crowdfunding, thereby facilitating the crowd’s investment decisions.

Design/methodology/approach

This paper follows an exploratory qualitative research approach based on semi-structured interviews with 23 market participants in equity-based crowdfunding: 12 investors, 6 new ventures and 5 third parties (mostly platform operators). After analyzing, coding and categorizing the data, this paper developed a theoretical framework and presented it in a set of six propositions.

Findings

The results indicate that the venture’s overall impression – especially perceived sympathy, openness and trustworthiness – is important to reduce perceived information asymmetries of investors in equity-based crowdfunding. To communicate these soft facts, personal communication seems to be replaced by pseudo-personal communication over the Internet (e.g. videos, investor relations channels and social media). In addition, the communications of third parties (e.g. other crowd investors, professional and experienced investors and other external stakeholders) influence the decision-making process of investors in equity-based crowdfunding. Third-party endorsements reduce the perceived information asymmetries and lower the importance of pseudo-personal communications by the venture.

Originality/value

Prior research shows that investor communication reduces information asymmetries between companies and investors. Currently, little is known about the role of investor communication in equity-based crowdfunding. This study focuses on the role of investor communication to reduce the perceived information asymmetries of investors in equity-based crowdfunding.

Details

Qualitative Research in Financial Markets, vol. 7 no. 3
Type: Research Article
ISSN: 1755-4179

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Article
Publication date: 25 May 2018

Alexander V. Laskin

The purpose of this paper is to apply a third-person effects theory to the study of corporate social responsibility communications. Previous studies have asked what…

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1038

Abstract

Purpose

The purpose of this paper is to apply a third-person effects theory to the study of corporate social responsibility communications. Previous studies have asked what importance investors assign to the socially responsible activities of corporations. However, in the context of publicly-traded companies, it becomes important not only to calculate the effects of available information on an individual investor, but also to estimate the effects of every piece of information on the investor’s perception of the investment community at large.

Design/methodology/approach

The study uses a survey methodology in order to evaluate what value respondents assign to socially responsible behaviors as well as to identify a presence of third-person effects in the corporate social responsibility evaluations. Using an online survey, the respondents were asked to read a modified news article and the respond to a series of questions. In total, 96 completed surveys were collected and analyzed.

Findings

The research finds the presence of third-person effects incorporate socially responsibility message processing. The results of the study show that, while individually people are supportive of the socially responsible behaviors of corporations, they perceive others to be less supportive of such behaviors; they also see others as less likely to encourage such behaviors through action. As a result, people are less likely to act on their own views of corporate socially responsibility as they perceive themselves to be outliers. These findings lead to important consequences for investor communications, which are discussed in light of the efficient market hypothesis.

Research limitations/implications

From an academic standpoint, the study proposed that in investor and financial communication, third-person effects could play a significant role. Yet, third-person effects research in investor relations literature simply does not exists. Thus, the study’s main contribution is expanding third-person effects theory into the field of the investor relations research.

Practical implications

From practical standpoint, expectations and perception of corporate social responsibility have a significant effect on corporate reputation and, thus, communication about corporate social responsibility become important as they shape these perceptions and expectations. Yet, such corporate social responsibility issues may include a variety of matters, such as governance, responsibility, and the quality of social and economic choices, sometimes even contradictory to each other. It becomes a job of investor relations managers to study, analyze, and respond to these competing demands.

Social implications

From societal standpoint, the study advances the debate on the role of corporations in the society. With such concepts as social license to operate and creating shared value, and the growing expectations about corporate behavior, understanding the stakeholders perceptions of socially responsible behavior of corporations as a function of their perceptions of other stakeholders’ viewpoints, creates a better understanding of the complexities involved in the issue of corporate social responsibility reporting.

Originality/value

Since investors and other financial publics are not homogenous and may have different perspectives, opinions, values, etc., they may react to the same information differently. Furthermore, they may expect others to behave differently and such perceptions, whether accurate or not, may, in fact, influence their own behavior, as third-person effects theory would suggest. Investor relations, then, becomes a function of managing these expectations. The presence of the third-person effects in investor communications can have a strong effect on market behavior and, thus, must become an important part of the investor relations professionals’ job – how the messages are crafted, communications, and measured. Yet, third-person effects is non-existent in the investor relations literature. Thus, the study provides an original contribution by applying a third-person effects theory in the investor relations research.

Details

Corporate Communications: An International Journal, vol. 23 no. 3
Type: Research Article
ISSN: 1356-3289

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Article
Publication date: 30 September 2014

Säde Rytkönen and Leena Louhiala-Salminen

The purpose of this paper is to explore the role of knowledge transfer in the communication of environment, social, governance (ESG) factors between companies and…

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1037

Abstract

Purpose

The purpose of this paper is to explore the role of knowledge transfer in the communication of environment, social, governance (ESG) factors between companies and institutional investors, when they attempt to reach a full appreciation and mutual understanding.

Design/methodology/approach

Empirical data were gathered through in-depth semi-structured interviews with six European institutional investors. Archival material was used to triangulate the findings.

Findings

Based on the interviews it was evident that ESG is only one consideration in the investment process and that there are several approaches toward integrating ESG. Furthermore, the investors viewed ESG within a financial framework suggesting that this financial framework is part of their vocational cultural professional mental models. Finally, the results indicate that investors attempt to reach a mutual understanding of ESG by carrying out an active dialogue with target companies.

Practical implications

The study indicates that companies should discuss/approach? ESG issues from a financial perspective. The findings also suggest that companies should emphasize the role of dialogue when communicating with investors in order to develop a mutual understanding of the company's ESG performance. Finally, by proactively discussing ESG with investors, companies will not only play a role in developing the knowledge base of capital markets regarding ESG, but this will also offer an opportunity for companies to explicate their own communication agenda.

Originality/value

The paper develops a framework for communicating ESG between companies and institutional investors. The framework depicts the diverging mental models of the two parties.

Details

Corporate Communications: An International Journal, vol. 19 no. 4
Type: Research Article
ISSN: 1356-3289

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Article
Publication date: 11 September 2017

Abe de Jong, Marieke van der Poel and Michiel Wolfswinkel

This paper aims to present case study evidence on the changes in the relations between chief executive officers (CEOs) of large firms and shareholders in the past three…

Abstract

Purpose

This paper aims to present case study evidence on the changes in the relations between chief executive officers (CEOs) of large firms and shareholders in the past three decades of the twentieth century. In line with insights from agency theory, the CEOs have experienced increased scrutiny from their principals, the shareholders. This development has affected financial communication and investor relations as well as stock market prices.

Design/methodology/approach

The Dutch electronics firm Royal Philips NV in the transition period of 1971-2001 has been studied using publicly available disclosures and stock market prices. A descriptive case study approach is combined with event study methodology.

Findings

It was observed that the increased emphasis on shareholder interests has affected the interactions between Philips’ respective CEOs and the shareholders’ reactions to strategic decisions as measured by stock price changes. Around the beginning of the twenty-first century, clarity and openness in CEO communication was the norm and deviations were punished with volatile stock prices.

Research limitations/implications

The study relies on publicly available data.

Originality/value

The case study of Philips can be extrapolated to other exchange-listed firms in the late twentieth century, which faced changed expectations about the role of the CEO, investor relations and the CEO’s accountability toward shareholders. This transition is relevant not only as a historical observation, but also as a background to studies in finance and management about top management and financial markets.

Details

Journal of Management History, vol. 23 no. 4
Type: Research Article
ISSN: 1751-1348

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Article
Publication date: 5 February 2018

Nadine Strauß

The purpose of this paper is to develop a synthesis for investor relations (IR) research on how to understand, conceptualize and build trust relationships between…

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1304

Abstract

Purpose

The purpose of this paper is to develop a synthesis for investor relations (IR) research on how to understand, conceptualize and build trust relationships between companies and the financial community within the practice of IR. In doing so, a working definition of the role of trust for IR, a conceptual model as well as strategies on how to establish, maintain and foster trust relationships within IR are proposed. Furthermore, a brief research alley is sketched to inspire more corporate communication scholars to conduct empirical studies in this field of research.

Design/methodology/approach

The paper is based on a thorough literature review on empirical and theoretical work in the field of IR, strategic financial communication as well as related disciplines such as public relations, marketing and business research. Furthermore, the literature from other disciplines dealing with trust in the organizational context (economics, psychology, sociology) has been reviewed to develop a working definition for the role of trust in IR.

Findings

The following supposition for the role of trust in IR has been worked out: “Trust relationships within investor relations manifest themselves on a micro-, meso-, and macro-level and involve interactions with various individual actors, groups of people, organizations, institutions, and systems. Within these trust interactions, investor relations presents itself simultaneously three-fold: as a discipline, an organization and as individual practitioners.”

Practical implications

To support the establishment, maintenance and fostering of trust relationships, IR needs to provide honest, transparent, comprehensive and coherent information to be in continuous, direct and mutual contact with stakeholders (e.g. investors, analysts, CEOs) and to endeavor a fair representation of the company in the media and among the public.

Originality/value

Facing recent changes in the media, regulatory and corporate environment, this conceptual paper provides a thorough discussion of the role of trust in the field of IR. The working definition, the conceptual model as well as the practical strategies to build trust relationships provided in this paper might help IR to overcome these challenges. The call for more research in this area and the actual employment of the suggested trust building strategies might contribute to fostering trust relationships in the financial markets, thereby contributing to a more sustainable financial system in the long run.

Details

Corporate Communications: An International Journal, vol. 23 no. 1
Type: Research Article
ISSN: 1356-3289

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Article
Publication date: 14 June 2018

Christian Pieter Hoffmann, Sandra Tietz and Kerstin Hammann

The purpose of this paper is to present a comprehensive, interdisciplinary review of international investor relations (IR) research published since 1990. It highlights the…

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1231

Abstract

Purpose

The purpose of this paper is to present a comprehensive, interdisciplinary review of international investor relations (IR) research published since 1990. It highlights the development of IR research, its disciplinary foundations and key areas of inquiry. Research is shown to reflect the rising importance of IR as a corporate communications function, its interdisciplinary character, and the recognition of its contribution to strategic management.

Design/methodology/approach

Findings are based on an interdisciplinary systematic literature review focusing on peer-reviewed journal articles published in English since 1990.

Findings

The authors differentiate five strands of research focusing on the organization, strategy, instruments, content and effects of IR. IR research is shown to have strong roots in the business and management, accounting and communications literature. The authors document a rising interest in the topic and a steady development beyond descriptive accounts of the function to distinctive lines of inquiry. The authors summarize the state of the field and derive a number of suggestions for future research.

Research limitations/implications

The review is limited in scope to the applied research process, including the choice of keywords, databases as well as peer-reviewed journal publications published in English since 1990.

Originality/value

This study contributes to the necessary structuration and consolidation of the emergent field of IR research by identify salient perspectives and common subfields. It provides both a comprehensive overview of the state of research and specific suggestions for future endeavors.

Details

Corporate Communications: An International Journal, vol. 23 no. 3
Type: Research Article
ISSN: 1356-3289

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Article
Publication date: 22 October 2019

Leana Esterhuyse

The purpose of this paper is to determine whether companies recognised for the quality of their sustainability reporting are also adopting investor relations (IR) best…

Abstract

Purpose

The purpose of this paper is to determine whether companies recognised for the quality of their sustainability reporting are also adopting investor relations (IR) best practices for their IR webpages. Quality communications to all stakeholder groups may then speak to organisational transparency and integrated corporate communication management (CCM).

Design/methodology/approach

An ordinary least squares regression model was developed to test the hypothesis that companies with quality sustainability reporting also adopts best practices in online IR. Sustainability reporting quality was signalled by inclusion of the company in a socially responsible investment (SRI) index. IR quality was proxied by disclosure scores compiled from content analyses of investor relations webpages.

Findings

This study find that inclusion in the SRI Index was positively and significantly associated with online IR quality, while controlling for other variables associated with voluntary disclosure behaviour.

Practical implications

For retail and institutional investors in SRI Index companies, cost of information discovery is reduced as they can use the investor relations webpages as comprehensive source.

Originality/value

This study contributes to the literature on corporate transparency by operationalising reporting “transparency” in that it considers the combined communications output to both financial and non-financial stakeholder groupings. A 2 × 2 conceptual framework for corporate disclosures is proposed that reconciles legitimacy theory and voluntary disclosure theory as motivations. It also contributes to the paucity of research on the links between public relations and investor relations in corporate communications by demonstrating a joint contribution to transparency.

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Article
Publication date: 31 December 2015

Larissa von Alberti-Alhtaybat and Khaldoon Al-Htaybat

The purpose of this paper is to investigate the use of Web 2.0-based social media for investor relations (IR), in the Middle Eastern (ME) context. IR is one of the…

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1610

Abstract

Purpose

The purpose of this paper is to investigate the use of Web 2.0-based social media for investor relations (IR), in the Middle Eastern (ME) context. IR is one of the under-researched topics of the corporate reporting subject area. This study seeks to contribute by investigating social media for IR in a ME context. It researches the perceptions of corporations, and individual and institutional investors regarding the phenomenon of social media for IR, given the particular cultural context. A conceptual model guiding future research is developed out of the analyzed data.

Design/methodology/approach

The research approach is qualitative and exploratory in nature, as the aim is to analyze perceptions and opinions of participants, in order to develop a theoretical argument based on these. To this end, the study employs a qualitative methodology and interview data collection. Data are analyzed using qualitative research coding styles.

Findings

Primary findings are encompassed in the theoretical framework, which theorises the adoption of social media for investor relation in particular but addresses voluntary corporate reporting in general. The study determines that there are various factors that support and hinder adoption, such as willingness to adopt social media for IR and potential risks and benefit, and that there are anticipated outcomes, such as improved communications between investors and corporations and a related power adjustment. The new element regarding IR that transpired out of the current study is the notion of investor empowerment and the directly related fear of lack, or essentially loss, of control.

Originality/value

The ME societies are very interested in social media applications, and utilize these in a broad range of their daily work and private activities. IR, as part of voluntary reporting, have been subject of recent debate, as little guidance is available and corporations’ practices vary. The current study highlights these factors in a largely under-researched market, the ME, and focuses a broader knowledge contribution based on the current findings. Finally, the concept of power is investigated in both its conventional and postmodern sense.

Details

Aslib Journal of Information Management, vol. 68 no. 1
Type: Research Article
ISSN: 2050-3806

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