Investor relations measurement: an industry survey

Abstract

Purpose – Publicly-held companies collectively allocate tens of millions of dollars each year to investor relations, yet little research has been conducted into how investor relations officers (IROs) try to determine the effectiveness of this investment. The purpose of this paper is to discuss the above issues. Design/methodology/approach – This exploratory study is based on a survey (n=384) of IROs who are members of the National Investor Relations Institute (NIRI), the world's largest professional investor relations association. Findings – Respondents strongly rebuked using share price as a valid measure of investor relations performance. A factor analysis revealed that IROs use four factors to measure program success (listed in order of stated importance): first, international C-suite assessment; second, relationship assessment; third, outreach assessment; and fourth, external assessment. IROs at large-cap companies place significantly more importance on both C-suite assessment and relationship assessment than their peers at small-caps. Research limitations/implications – These results may not be generalizable to IROs who are non-NIRI members or investor relations consultants. Cross-cultural studies on this topic are needed. Practical implications – The evaluative factors that emerged in this study may be used by IROs to develop and refine their evaluation metrics relative to their peers. Originality/value – This is one of the first and largest studies to specifically examine program measurement and evaluation in the context of investor relations. These findings help set the stage for future work in this area.