Contextualisation of the function of investor relations from an institutional and private investor perspective

Abstract

There has been a lot of uncertainty and instability in world financial markets in recent times. National economies have slowed down and stock markets have been on the downturn globally, leading to the current ‘global financial meltdown’. In an attempt to address this crisis, national governments were forced to respond with acts such as the National Credit Act in South Africa, and the federal bailout of banks and corporates such as Goldman Sachs and General Motors in the United States. This global crisis has had a huge impact on how investors screen organisations before they decide where to invest their money. Investors or shareholders have very specific information needs. They control the resources that enable a company to operate and expand. The aim of this study is to contribute toward contextualising the function of investor relations from an institutional and private investor perspective, by assessing what the needs of this community are, other than financial performance. This study adopts a quantitative approach where a questionnaire was developed and 40 large institutional and private investors responded on what they believe are the most important non-financial aspects of an organisation's communication with the investment community.