INVESTOR RELATIONS OF STOCK MARKET AND FINANCIAL INSTITUTIONS

Abstract

Investor Relations are often referred to as financial public relations. Investor Relations are a specific type of communication as there is no other area hedged around with so many rules as for when, to whom and why something is to be said. Experts in the topic of relations with investors need to possess extensive and thorough knowledge of public relations, as well as of how a capital market works. Every mistake within investor relations may result in a loss of a positive image and trust of stakeholders, but also influence the stock price, which the crises on the financial markets over the last two decades have made clearly evident. Investor relations can be considered to be the most difficult type of communi­cation. It is due to the fact that the consequences of information provided by the company have an immediate and clear-cut reflection in a share price, and therefore decide about the market value of the company. It means heavy responsibility, criminal included, of people who are in charge of IR. Investor relations can be defined as a process of managing information concerning business management, especially in the areas of finances, planning, marketing, production and control, between a public company and investors. The imperative of investor relations is building trust between the participants of a capital market, as well as ensuring proper and satisfactory for both parties relations between a company and its shareholders. A growing number of entities on the capital market make operations within investor relations increase in their importance. It is conditioned by external factors, mainly by changes in the situation on capital markets, both after the financial crisis of 2008 and the present global economic crisis. Considerable capital needs of the biggest countries, the necessity to recapitalise huge financial institutions and the biggest companies contributed to the fact that access to capital has become a lot harder, at the same time increasing its price. In the given circumstances, effective communication with investors may be one of the key factors contributing to creating a long-term advantage of the entity over its competition, and often, even a factor conditioning further functioning of a company. Keywords: investor relations, financial public relations, capital market, competition, stock market, financial institutions.