IR’s Role in Corporate Ethics and Reputation Management
The Cincinnati Tri-State Chapter of NIRI held its second meeting of the season on December 13, 2011. Peter Firestein of Global Strategic Communications led a thought-provoking discussion including the role of investor relations in reputation management. Below are some key points Peter shared at the meeting.
- The job of an IR professional job really never stops. For example, management of a company one week might celebrate its strong stock performance, but the IR director knows that trend could quickly change with the next week’s market open.
- IR professionals have unique knowledge and other traits that can lead to career success, but reinvention is necessary because the world around them is always changing. They must act on their knowledge and contribute to management discussion and strategy.
- CEO credibility is one of the most important factors affecting investor sentiment and stock performance. Sometimes CEO’s need to be confronted to help them improve company credibility. Peter shared an example he was personally involved in as a strategic advisor to a company, and it concluded successfully despite several challenges.
- Perception studies are a good way to get candid views and feedback from investors, including their opinions regarding company credibility. During investor conferences and roadshows investors focus on listening to management and gathering information, but investors also seek opportunities to express their opinions about a company. Investor sentiment involves emotions and is personal – they may tend to avoid delivering feedback directly to a company. A perception study administered by a third party can facilitate emotions to be prompted and a true opinion to be expressed. Companies should caution against a “fallacy of familiarity” – frequent interaction with an investor does not necessarily mean the company is hearing what they need to enhance shareholder value.