Investor Relations Public Relations: Investor

Investor Relations

Public Relations: Investor relations

Whether officers and CEOs like to admit it or not a corporation's reputation often rests in its perceived reputation, residing in the heads of investors rather than in its "tangible assets" (Dowling & Weeks 2008, p.28). In other words, emotional as well as purely financial and logical concerns can often color an investor's perception of his or decision to continue to include company within his or her financial profile. The need for a public relations department to maintain strong, positive investor relations is becoming an increasingly critical focus of major organizations, particularly given the recent spate of scandals and an increased interest on the part of shareholders regarding the moral polices of companies. Public relations specialists in investor relations must work to monitor the company's reputation amongst investors, work to enhance the company's image in the financial community and media (including on the Internet) and convey a reputation of stability and trust to investors.

One of the most important considerations for any individual involved in corporate public communications designed to improve investor relations is dealing with the mass media, which is often a critical building block in the decision of an investor to invest in, remain with, or sell shares in a company. "The ideal self-image of the company...can inform a useful debate about what [it] needs to change" (Dowling & Weeks 2008, p.30). Executives can explore contradictions between what the company says about itself in external communications (the "we say" or "ad speak" of the company) and what is being reported to various stakeholders (what the media says or "street speak" about the company) (Dowling & Weeks 2008, p.29). A good example of this is the scorecards produced by the financial media in many articles, like the 'best and worst' companies to invest in 2008, for example. The rationale behind these lists is often fairly vague, and a PR specialist must often devote his or her time to bolstering how the company's brand name is perceived in terms of, for example its "taint-free reputation," its products and advertisements as "instantly recognizable," as a company that "cares about its reputation and customers" and provides "satisfactory experience reinforced by advertising" (Dowling & Weeks 2008, p.29). The company must produce a good product, be perceived as producing a good product by customers, and convey this to investors.

Unfortunately company's poor performance in one area -- its reputation, product, ethics, or advertising -- can completely overshadow excellence in other areas, thus a specialist in PR investor relations may spend a great deal of his or her time combing over press coverage and analyzing how the pubic and the media's created perception is translating into the investor's perception of the company, and any disconnect between the company's image in the projected literature and media coverage (Dowling & Weeks 2008, p.29). "One way to accomplish this is to show how the good themes complement other important messages within the context of the company's overall reputation story," another is to confront negative coverage 'head on' and try to remedy the problem or to put a positive spin on the problem (Dowling & Weeks 2008, p.33). One example of a strong and popular product that had problems in one critical area was that of Nike, which despite the popularity of its shoes and strong brand image had to work to rebuild its ethical reputation after accusations that it allowed workers to labor in 'sweatshop' conditions overseas.

A new area that a public relations specialist in investor relations must deal with in the current environment is that of the new phenomenon of grass-roots Internet reviews. "Companies have always had to deal with complaints and criticisms -- both deserved and not. But the Internet has drastically increased the potential damage to a brand or a company's reputation. Frustrations with a company's practices, products and service that once were confined to relatively small circles now reach complete strangers around the world" (Martin & Bennett 2008: 6). Many companies have taken a disastrous 'do nothing' approach or have simply underestimated the influence of the speedy new media to transmit negative and positive buzz about good and bad investment prospects: "The majority of companies we contacted were either unaware their company was the subject of attacks or were taking a 'wait-and-see' approach in deciding what to do about it (Martin & Bennett 2008: 6).