During an IPO or an other financial transaction process, a company puts a lot of work into establishing coherent messages and raising awareness of its attributes towards investors and other stakeholders. The Communications Firm builds a bridge between the company and the financial community.

By Urs P. Knapp, knapp@farner.ch

Once the transaction process is completed, the whole team can take a big breath of relief. But, the work is not done yet – it’s actually just starting. Because strategically planned and executed financial communications and reputation management are critical to a company’s survival in the long term.

Corporate Communications is all about ensuring a timely and effective dissemination of information, maintaining a smooth and affirmative relationship with stakeholders, and building a positive corporate image. And it’s especially about managing perceptions.

In today’s environment of easy access to and overflow of information, increasing competition, and fast market movements, communicating adequately and managing the corporate reputation has become a significant asset to a company’s well-being.

Define a clear Line of Messaging

The reputation of a company and its products is built through the messages disseminated by the company to stakeholders such as employees, customers, investors. Companies have to develop a clear line of messaging to use when communicating with all internal and external target groups. The practice of managing relations with the financial community, or, more specifically, with investors, cannot stand alone.

An investor does not only base his investment decision on financial information, but rather on his view of the company that is influenced by the outside world (one example). Investor relations, corporate communications and reputation management are all complementary to and co-dependent of each other.

Manage the Corporate Reputation

Investor relations is a strategic management responsibility with the purpose of enabling an effective two way communication between a company and the financial community. The goal of investor relations is to build trust, to manage a company’s reputation, and that of its products, its people, and its projects.

Investor relations entails more than just disseminating financial information. Financial indicators provide information about past performance, while information about the company strategy focuses on the future potential (one example).

We have seen that what and how a company communicates can have a huge impact on its reputation. The Economic Times wrote: «More than allegedly selling Maggi with excessive lead content or mislabelling packs, perhaps Nestle India’s biggest transgression in the run-up to the noodles hitting the fan in early June may well have been the inadequate communication with government and regulators».

Investor Relations and Financial Communications are complementary

Effective and regular communication activities are thus more than just nice-to-haves – they are essentially must-haves. And they should thus be thoroughly discussed and defined in a corporate communication strategy. A company can position itself on different levels – focusing on the company itself, the management, or the products/services, or a mix of all.

Determining the profiling focus, the stakeholders to target, and the mix of channels and instruments to use are the key elements of a communication strategy.

The practice of investor relations blends financial analysis and ad hoc regulation compliance with the arts of communication and strategic planning. Investor relations and financial communications are thus complementary to and an integral part of a company’s internal and external communication strategy. Only if investors and other company stakeholders are satisfied with the company strategy, reputation and progress can a company survive in the long term.