INVESTOR RELATIONS

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INVESTOR RELATIONS
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Investor Relations (IR)

• Provides information to investors according to
  regulations governed by the United States
  Securities and Exchange Commission (SEC).
• Began in l933 with the passage of the Securities
  Act and the Securities Exchange Act of 1934aimed
  at protection of the public from abuses in the
  issuance and sale of securities.

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Investor Relations is aimed at

• Helping the firms securities reach their market
  price. IR professionals encourage stockholders
  to buy and hold company shares and persuade Wall
  Street financial analysts and institutions to
  take an interest.
• Shareholders are necessary to support
  managements objectives.

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The Investor Relations Professional seeks to

• Win shareholder support through timely and
  valuable communications.
• Serve as their link to the organization.
• Provide information according to SEC regulations.
• Uphold ethical and professional guidelines.

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Materiality

• Materiality refers to corporate decisions that
  cause an investor to buy, sell, or hold company
  stock.
• Companies must disclose information that is
  considered to be material.

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Examples of Material

• Proposed mergers or acquisitions
• Change in dividend policy, capital investments
• Determination of earnings
• Acquisition or loss of significant business
  contract
• Major management changes
• Purchase or sale of significant assets
• Major discoveries or inventions
• Marketing new products

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To be in compliance with the Securities and
Exchange Commission (SEC)

• Organizations must engage in timely and
• full disclosure

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Full Disclosure

• Full disclosure refers to all investors being
  informed quickly, fully, and fairly about
  material corporate information.
• An issue that has come up recently has been
  selective disclosurethat is, providing
  information to some investors but not all
  investors.

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Question..

• Sears acquired an organization, which was the
  third-largest retail acquisition in history.
  Investor relations went well with 95 of the
  organizational shareholders voting in favor of
  the deal. Can you name the organization?
• Hint Some say they didnt know which end was
  up.
• Answer Lands End

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The SEC tries to limit

• Insider trading
• While at the same time it tries to facilitate
• Disclosure
• This way, information reaches all, not just a few
  who would have unfair advantage.

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The New York Stock Exchange(NYSE)

• Governs large companies that are members.

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Investor Relations Activities

• Corporate Investor Relations Professionals would
  prepare
• Annual Reports
• Quarterly reports
• Annual meetings
• Conference calls
• Media calls and monitoring
• Proxy mailings

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Question

• Do you remember who resigned as Tycos CEO under
  the allegations of tax evasion?
• First name Hint Mr. Wilsons young neighbor
  always carried a slingshot, hung around with
  Joey.
• Answer Dennis Kozlowski

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Investor Relations Professionals

• Deal with the stock market analyst
• Analysts are responsible for determining the
  value of stock based on its current value in the
  market and their expectations of the companys
  future earnings per share.
• There are two types of analysts sell side and
  buy side analysts

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Analysts Breakdown

• Sell-side analysts research stocks and attempt to
  predict future earnings and place recommendations
  on each stock to buy, sell, or hold.
• Buy-side analysts work for large institutional
  firms, such as mutual funds, investment advisers,
  family trusts, and pension funds. They find
  stocks and their institutions can purchase them
  and make a profit.

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Internet Investor Relations

• Organizations today use the Internet to reach
  investors. They must provide information to the
  investors that is honest and trustworthy.

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Internet Communications

• Homepage providing information
• Web site serves as a service to new, as well as
  seasoned, investors and attracts potential
  investors
• Information can be controlled through an
  integrated site rather than distributed randomly
• Investments can be done online and investors can
  research investments on the Internet

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Question

• Can you think of a rumor that hurt investments
  for an organization?
• How was the rumor handled?
• Was the organization able to rebound to your
  knowledge?