Buy side: “IR makes a difference”

Some CEOs and CFOs don’t believe, in their heart of hearts, that investor relations makes a difference. The numbers speak for themselves, they say – it doesn’t matter if you commit time and resources to doing a good job of IR vs. complying with the minimum requirements for disclosure. So why do IR?

A neat little video on the value of IR surfaced yesterday on Bradley Smith’s IR/PR Product Blog – published by Shareholder.com and NASDAQ OMX. The clip is Brian Rivel, president of Rivel Research Group, sharing a result from a recent survey in institutional investors. What Rivel says about IR:

  • 74% of buy siders surveyed say good IR does has a real effect on valuation.
  • How much does good IR help a company’s valuation? Median answer is +10%.
  • How much of a discount does bad IR impose? Median answer -25%.

Rivel sums up:

So the difference between good IR and bad IR in this environment is 35% of a company’s valuation. So the answer to the question, Does IR make a difference? Absolutely. IR makes a difference.

This is a perception study, not scientific proof of causation. But it’s interesting, considering that buy side investors aren’t overly inclined to dispense praise, to see that they perceive the quality of investor relations as a real factor in valuation.

If for no other reason than the feel-good experience of having someone say your job is worth doing, you should take a look at the Rivel video – and while you’re there, browse Smith’s blog for interesting comments on other topics.

Advertisements

Tags: , , ,

One Response to “Buy side: “IR makes a difference””

  1. Buffett takes a poke at IR « IR Café Says:

    […] support the value of effective IR. For example, surveys of buy side investors say good IR boosts a company’s valuation up to 10%, while bad IR hurts as much as […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: