VIENNA, VA: Investor relations has become increasingly important for public companies over the past year, due in large part to the minefield of government regulation, according to the National Investor Relations Institute's (NIRI) recently released Trend Survey for 2004.
Two-thirds of IR officers surveyed said that their responsibilities had increased in 2004. Nearly half of those attributed the increase at least partly to the stricter disclosure requirements that stem from Sarbanes-Oxley and Regulation Fair Disclosure.
Other frequently reported reasons for the increase were the rising needs of institutional investors for information, strategic decisions to take a more proactive approach to IR, and an added role for IR in strategic planning for the firm at large. Additionally, 41% of respondents said they served on their firm's disclosure committee.
The most dramatic leap in the survey was the percentage of IR officers who considered "gaining senior management's support for IR" to be crucial to their ability to be effective. That figure leapt from 32% in 2002, when the last survey was done, to 82% for 2004.
One example of that success is credit-card giant MBNA. The company held its first investor meeting last month to the delight of analysts and investors, countering its long-cultivated reputation for playing tight to the vest with IR. The Delaware-based company did not return calls for this article.
NIRI president and CEO Lou Thompson, however, said that the practice has flourished recently. "I think we saw growth in investor relations days after Reg FD went into effect" more than four years ago, he said. "It's really an opportunity to open up the company to investors."
MBNA, which brought in a new CEO last year, also ran its first Super Bowl ad last week. Fred Bratman, president of Hyde Park Financial Communications, said that MBNA's newfound openness is likely part of an overall business plan.
"The new CEO obviously feels that greater transparency is in the best interest of the company," Bratman said. "If a company is changing strategy, or undergoing any sort of transformation, it's in its best interests to begin a dialogue with investors. Investors want to know what the company is trying to do and how it plans to get there."