Toward Symmetry: An Assessment of Stockholder Communication Practices in South Africa

Abstract

Investor Relations (IR) has gained prominence globally and is now considered to be a major contributor to corporate value. For companies to thrive in the global environment, they need to build and maintain mutually beneficial relationships with their primary stakeholder, the stockholder. Consequently, scholars have argued that for IR to maximize its benefit to companies, the profession needs to shift from one-way asymmetrical communication to two-way symmetrical communication with stockholders. Although scholars have recommended this shift, there is a paucity of studies that have explored whether two-way symmetrical communication has been embraced in IR practice. Using the two-way symmetrical model of communication as its framework, and a qualitative methodology consisting of in depth interviews, documents analysis, and qualitative content analysis, this paper assessed how Investor Relations professionals in South Africa use communication to maintain relationships with stockholders. The findings of the study show that most IR professionals in South Africa are using what we term a bridged approach, consisting of one-way and two-way symmetrical communication, to maintain relationships with stockholders. Evidence gleaned from the study further indicates that the nature of communication between IR practitioners and stockholders has broadened beyond financial issues to include engagement on non-financial issues. These findings do not only show the existence of a paradigm shift in IR practice in South Africa, they also suggest the need by IR as a field to maintain constant dialogue with Public Relations theory.