Risk, Regulation, Complexity, Comprehending Investor’s Relation

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Joshua Pendergast

Investor relations (IR) is a strategic management responsibility that is capable of integrating finance, communication, marketing, and securities law.

The SOX Act-As per the Wikipedia, “The Sarbanes-Oxley Act of 2002 significantly increased the importance of investor relations in the financial markets. The act established new requirements for corporate governance and regulatory compliance, with an increased emphasis on accuracy in auditing and public disclosure. Notable provisions of the act which apply to investor relations include enhanced financial disclosures and accuracy of financial reports, real-time disclosures, off-balance-sheet transaction disclosures, pro forma financial disclosures, management assessment of internal controls, and corporate responsibility for financial reports.[3] More specifically, Sarbanes-Oxley sections 301, 302, 404, and 802 have been of particular interest to companies improving corporate compliance. Similar to Sarbanes-Oxley is the Keeping the Promise for a Strong Economy Act (Budget Measures), 2002 in Canada, Financial Security Law of France in France, and J-SOX in Japan. The European MiFID Directive, although principally concerned with investor protection, also covers regulation and compliance for listed European companies.”

The Importance of Investor Relations –Investor Relations (IR) combines finance, communication, and marketing to effectively control the flow of information between a public company, its investors, and its stakeholders.

Investors play a major and vital role in the success and growth of a company. Because of that fact, it’s of the utmost importance for companies to maintain strong, transparent relationships with investors. This is where the investor relations department of a company comes into play.

Here are some tips for maintaining good investor relations.

  • Email Updates: Status or Newsletters

The number one component to keeping good relationships is communication and making sure your investors have up-to-date information.

  • Keep a Unique Contact List of Investors

Most seed and series A-funded companies end up with some form of the spreadsheet of investors, categorized either by the amount invested or by their connection to the company. It is important to keep these contacts separate from others for any hope of organized “investor relations” to exist.

  • Help Investors With Deal Flow

Equity investors struggle with is finding really good deals or diamonds in the rough. Word of a good deal or investment opportunity can easily create a herding problem and a so-called “hot round,” which can then spike a company’s valuation.

Maintaining or having investor relations is not as complicated. Clear communication with the investment community doesn’t have to cost a fortune and can improve your amplitude as a founder.

About the Author

Joshua Pendergast

Joshua Pendergast is a successful professional who has been serving in the field of finance for over 20 years. In his spare time he enjoys the outdoors playing various sports and hiking in Maine.

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