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The convergence of investor relations and public relations: fitting investor relations into the overall corporate communications strategy

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The convergence of investor relations and public relations: fitting investor relations into the overall corporate communications strategy

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Content THE CONVERGENCE OF INVESTOR RELATIONS AND PUBLIC RELATIONS:
FITTING INVESTOR RELATIONS INTO THE OVERALL CORPORATE
COMMUNICATIONS STRATEGY

by

Samantha D. Wheeler

A Thesis Presented to the
FACULTY OF THE GRADUATE SCHOOL
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
MASTER OF ARTS
STRATEGIC PUBLIC RELATIONS

May 2007

Copyright 2007 Samantha D. Wheeler

ii
ACKNOWLEDGEMENTS

Firstly, I would like to thank my committee for taking the time to work with me during
this project. I would especially like to thank my committee chair, Jennifer Floto, for her
unwavering support and commitment to this project.

I would also like to thank everyone who aided in research for this project: Geoff
Mordock and everyone at Fleishman-Hillard Los Angeles; Ayodele Moore; Liv Wright;
and Nicole Bilodeau. Without your help, none of this would have been possible.

Finally, I would like to thank my family and friends, especially my mother, my father and
Gregory. Your support (and patience) through this project has meant the world to me, and
I hope I have made you proud.

iii
TABLE OF CONTENTS

Acknowledgements ii

List of Figures v

Abstract vi

Introduction 1

Chapter One: Overview
What is Investor Relations? 2
Why is Investor Relations Important? 2
The Evolution of Investor Relations 4
Corporate Disclosure and Sarbanes-Oxley 5
Convergence between Investor Relations and Public Relations 7

Chapter Two: Literature Review
What Investor Relations Is and Is Not 12
The Investor Relations Practitioner and Immersion in Company Culture 13
Working to Integrate Investor Relations and Public Relations 15
Corporate Scandals and Their Influence on Corporate Communications 17
Opening the Lines of Communication between Public Relations 18
And Investor Relations

Chapter Three: Case Studies
The New York Times Company: News. Information. 22
Entertainment. Integrated.
FedEx: Integrated Communications? Absolutely, positively. 27
General Electric: Bringing Investor Relations to Life 33
Dell: Direct Communications 36

Chapter Four: Method
Background and Study Purpose 39
Methodology 40

iv
Chapter Five: Results
Investor Relations Practitioner Surveys 42
Public Relations Practitioner Surveys 47
Student Surveys 51
Significant Findings/Observations 57

Chapter Six: Analysis
Learning about Investor Relations at School 61
Learning about Investor Relations at the Office 62
Developing Intrapersonal Relationships 64
Reporting Lines 64

Discussion and Conclusion 66

References 68

Appendices
Appendix A: Glossary of Common Terms 71
Appendix B: Important Investor Relations Communications Tools 77
Appendix C: Shareholder’s Letter 79
Appendix D: Sarbanes-Oxley Provisions 83
Appendix E: Survey Results 86

v
LIST OF FIGURES

Figure 4.1
The New York Times Company Organization Chart 23

Figure 4.2
FedEx Organization Chart 29

Figure 6.1
Investor Relations Survey Question One 43

Figure 6.2
Investor Relations Survey Question Two 44

Figure 6.3
Public Relations Survey Question One 47

Figure 6.4
Public Relations Survey Question Two 49

Figure 6.5
Public Relations Survey Question Four 51

Figure 6.6
Public Relations Survey Question Five 52

Figure 6.7
Student Survey Question Two 54

Figure 6.8
Student Survey Question Three 55

Figure 6.9
Student Survey Question Four 56

vi
ABSTRACT

Investor relations is a function that integrates finance, communication, marketing
and securities law to enable effective communication within the company and to analysts,
investors and others within the financial community. Traditionally, investor relations and
public relations functions worked separately from one another. But changing market
conditions combined with investors’ lack of confidence in the trustworthiness of
corporate communications programs have suggested that investor relations and public
relations functions should converge. The realization that intangibles—or non-financial
factors—make up a significant portion of a company’s market value, and greatly affect
how investors and other audiences view that company. The opportunity for the
convergence of investor relations and public relations has potential to support the
suggestion that the company speak with one voice for unified corporate messaging that
benefits both the financial audiences and the general public.

1
INTRODUCTION

“Investor relations—it’s not a dog and pony show.”
—Louis Thompson, Jr., NIRI President and CEO

When I came into the Strategic Public Relations graduate program at USC, I was
somewhat intimidated. A vast majority of the students came from communications-
related backgrounds, and here I was—an economics major—entering a program with
subject matter almost foreign to me (save for a few choice internships). And suddenly, in
my Introduction to Strategic Public Relations class, I found something that connected
everything for me: the practice of investor relations. It sounded like a novel idea, a
practice that combined the communications aspect of public relations and the numbers
aspect of economics. I knew I had to learn more about the topic.
The more I researched, the more I realized that there was more to investor
relations than the brief two-page summary in my Intro book. Investor relations functions
at almost an entirely different level than traditional public relations. Or does it? Perhaps
investor relations and traditional public relations practices are more similar than I thought.
This brings me to why I wanted to study the topic: I was eager to learn more
about investor relations from a fairly novel approach. I decided to research the
convergence of investor relations and public relations, because it is becoming
increasingly important in today’s business world to have IR and PR departments working
in tandem. With corporate scandals, SEC regulations and all else in between, it is just as
important for a company to have a strong investor relations program as it is for a
company to have a strong public relations program. The question I hope to answer in this
study is whether or not it is important for a company to fit its investor relations program
into the overall corporate communications strategy.

2
CHAPTER ONE: OVERVIEW
What is Investor Relations?
In today’s society, a publicly held company’s financial performance is becoming
increasingly transparent, and therefore, more easily scrutinized. Company financial
performance is constantly dissected by an array of audiences—not just a small group of
savvy shareholders and industry analysts. Other audiences such as financial media,
company employees and industry competitors (among others) now regularly scrutinize
the true performance and valuation of public companies. The manner in which a company
communicates this value to its audiences is essential to its ongoing success. It is the job
of the investor relations professional to make sure this communication is managed
effectively and properly.
The concept of investor relations is often confused, even among public relations
industry professionals. To many corporate executives, the investor relations professional
simply communicates with the company’s shareholders. However, this thought
oversimplifies the investor relations function. A more complete definition of investor
relations is offered by the National Investor Relations Institute (NIRI), which states:
Investor relations is a strategic management responsibility that integrates finance,
communication, marketing and securities law compliance to enable the most
effective two-way communication between a company, the financial community,
and other constituencies, which ultimately contributes to a company’s securities
achieving fair valuation (www.niri.org).

Why is Investor Relations important?
While it is important for a company to fully know and understand its valuation in
the market, it is equally important to have someone in the executive offices to
communicate and interpret that value to current and potential investors. Investor relations

3
professionals must communicate effectively to demonstrate a company’s current
valuation and to ensure that that valuation is not negatively affected. Practitioners can
achieve this in four basic steps:
1. Determine the investment proposition that a company presents.
2. Identify and target the appropriate investor audience (i.e. individual,
institutional, etc.)
3. Create a communications platform to present to each key investor audience.
4. Build relationships with aforementioned investor audiences and maintain
constant communications with the financial market so the key value drivers of
a company’s business are current and obvious to investors (Corbin 2004, 12).
In addition to a company’s valuation, investor relations practitioners must ensure
that all important audiences completely and thoroughly understand the organization’s
basic business goals. Shareholders have the need and the right to know how company
management has used, and intends to use, their money. Investor relations practitioners
need to be in frequent communication with shareholders to convey and interpret financial
results and to show that the company is on track and meeting its business goals (Corbin
2004, 32).
Investor relations also functions as the communications link between shareholders
and senior management. The investor relations practitioner should fully understand and
be responsive to the needs of both the corporation and the investor. In addition to
communicating financial progress to investors, investor relations professionals must
communicate the views and concerns of investors to senior management. For this to be
effective, the investor relations practitioner must be fully ingrained in the daily activities

4
of the C-Suite (see glossary); he or she must be a key part of strategic planning within the
company. This forms a give-and-take relationship: the investor relations practitioner is
provided with company information to be shared with the investment community, and the
C-Suite is given important financial market information that can help with its strategic
communication (Higgins 2000, 26).
The Evolution of Investor Relations
While investors and the financial market have existed for the better part of the
century, investor relations departments have only appeared during the last two decades.
In this time, investor relations has evolved from a passive form of financial
communication that primarily revolved around Wall Street, to an active strategic
marketer to both institutional and individual investors (Higgins 2000, 26).
The investor relations practice experienced huge growth during the 1980s. In an
analysis of the creation of investor relations departments, Rao and Sivakumar (1999) cite
a case study done by Useem (1993), which summarized the growth of investor relations
departments:
Until the 1980’s, to the extent that shareholders occupied management time at all,
investor relations was often the province of the chief financial officer (CFO). As
shareholders’ questions would periodically arise, the CFO would take time from
a full schedule to respond. Investor relations then entailed little more than public
relations and occasional crisis management…At decade’s end, by contrast, the
investor relations office had become a full-time professionalized operation….
The investor relations manager occupied an office proximate to, if not within, the
executive suite in all seven companies (Rao & Sivakumar 1999).

During the 1984-1994 period, the presence of investor relations departments
within Fortune 500 companies grew dramatically; in 1984, 16% of companies had an
investor relations department, yet by the end of 1994, 56% of companies had such
departments (Rao & Sivakumar 1999). Some argue that between 1984 and the present,

5
investor relations has done more than any other area of communication to give public
relations respectability and credibility (Dolphin & Fan 2000). The key audiences are so
important that many companies choose to hire independent external investor relations
firms instead of developing full scale in-house investor relations departments. Companies
do so for a variety of reasons, including:
 To serve as a bridge between management and the financial community to
enhance management’s relationship with analysts and investors;
 To provide sophisticated guidance and counsel on key topics such as shaping the
company’s message to prospective investors and the financial community;
communicating news and events; the timing and content of disclosure; and
financial community relations;
 To market intelligence, including tracking investor and analyst perceptions and
sentiments regarding the company;
 To provide support in increasing visibility of the company’s public image; and
 To support administrative tasks, such as issuing press releases, communicating
with NASDAQ, Shareholder.com, Dow Jones and other outlets, and maintaining
the IR infrastructure (Burfening & Capaccio 2005, 57).
Corporate Disclosure and Sarbanes-Oxley
After the stock market crash of 1929, the United States government recognized
the need to change how equity markets operated. The government created the Securities
Acts of 1933 and 1934, which led to the establishment of the Securities and Exchange
Commission (SEC), the agency that regulates stock activity (see glossary). Since then,

6
these regulations have formed the basis for defining how and what information must be
disclosed to investors and how it must be disclosed (Cole 2004, 5).
These acts defined two types of disclosure (see glossary)—structured disclosure,
which includes required SEC documents (i.e., 10-K, 10-Q, etc); and unstructured
disclosure, which includes information companies can disclose at will (i.e., shareholder
letters, press releases, etc.). Unstructured disclosure can be problematic, especially if
investors contend they have been misled or misinformed. Two factors often contribute to
such problems: the definition of “material” information, and the involvement of
“insiders.”
Material information (see glossary) is any information that would cause someone
to buy, sell or hold a stock; an insider (see glossary) is someone who has access to
material information and who, based on that information, cannot trade or share that
information with someone who might trade on it (Cole 2004, 6). When questioning
whether or not information is material, investor relations practitioners can employ the
Five-Minute Rule recommended by NIRI Chairman Louis Thompson: “If it takes more
than five minutes to discuss whether something is material or not, it’s material. Disclose
it” (Cole 2004, 6).
In the early 2000s, shareholder trust in the investment community began to erode.
Companies such as Enron, WorldCom and Tyco (among many others) were involved in
various corporate scandals that caused members of the investment community to lose
confidence in their actions and, subsequently, the actions of corporations across the
country (Gilbert Welytok 2006, 9). This greatly impacted investor perceptions of publicly
traded companies, and the need for united messaging from an integrated communications

7
function emerged. As a result, the SEC, Congress, and President George W. Bush passed
the Sarbanes-Oxley Act (SOX) in July 2002, with the goal of guaranteeing the
trustworthiness of publicly reported financial information and strengthening consumer
confidence in United States capital markets (Gilbert Welytok 2006, 9). SOX included a
wide range of governance reforms, including new regulations and punishments for
corporations, executives, auditors, securities analysts and attorneys.
Before SOX, federal and state legislation included no specific regulations for how
companies compiled information stated in their financial reports. If it turned out that
investors were taken advantage of, investors themselves had to prove to the court that the
financial information they received was untruthful (Gilbert Welytok 2006, 12). SOX set
new parameters for corporate governance and disclosure as well as a new system of
checks and balances for financial reporting (see Appendix D).
Convergence between Investor Relations and Public Relations
Historically, investor relations and public relations operated separately.
Convergence between the two practices was often seen as unnecessary to the success of a
company’s corporate strategy (Turnock 2002). But while investor relations does not
necessarily fall under the marketing/public relations aspect of the corporate
communications umbrella, it is extremely important now that mainstream culture has a
greater awareness of and participation in the stock market (Rosenthal 1999). Today, it is
the responsibility of the company to make sure that investor relations and public relations
work together; a company’s market capitalization is largely determined by “intangibles,”
including employee satisfaction; ethical (but profitable) business partnerships; a solid
senior management team; and, most importantly, a company’s reputation. Market studies

8
show that as much as 40 percent of a company’s market capitalization is determined by
intangibles; this number has likely increased due to the accounting scandals of the late
1990s (Cole 2004, 60). Additionally, almost any novice can become a savvy investor,
with books such as Investing for Dummies and Web sites such as Yahoo! Finance at their
disposal.
There are several theories about why investor relations and public relations have
not operated in unison. One stereotype is that public relations practitioners are creative
while investor relations practitioners are strategic and analytical. The segregation of key
audiences has also posed a barrier; investor relations practitioners primarily deal with
financial audiences, including investors, analysts and financial media (Turnock 2002).
Public relations practitioners have historically dealt with broader key audiences,
including consumers, employees, general and specialty market media and industry
influencers.
Because of the emphasis on finance, investor relations professionals are often
expected to have an extensive financial background. And unlike general public relations,
investor relations must work within strict regulations and legal parameters (Turnock
2002). The chain of command is also different between the two practices; in most
organizations, the investor relations department reports to the CFO, while the public
relations department reports to the CEO. This is not to say that public relations
practitioners aren’t accountable for accuracy and truth. Public relations organizations
such as Public Relations Society of America (PRSA) and the International Association of
Business Communicators (IABC) have their own set of suggested rules by which public
relations practitioners are asked to abide.

9
Some practitioners believe that the problem starts in higher education, the earliest
point of career development. Many programs do not incorporate public relations and
business strategy, which leads to recent graduates picking one side or another.
Technology poses another problem, as almost everybody—including investor
relations’ and public relations’ key audiences—has access to a company’s
communication via the Internet. The Internet increases the possibility of audiences
screening the same information, which further emphasizes the need for public relations
and investor relations to work together. With the 24/7 news cycle of the Internet,
discrepancies are more obvious than ever; there is a much greater need for
communication to be consistent and for all company departments to speak in one voice
(Turnock 2002).
The implications from corporate scandals such as Enron and WorldCom have
fueled the need for consistency in company communications strategy and messaging. Yet
after those investigations, investor relations and public relations departments are still
separated. An example is given in a 2002 article from PR News:
In some companies, the IR officer is not allowed to talk with the financial media,
so a media relations person in corporate communication takes a query, refers it to
the IR person who provides a response back through the same channel. In this
situation, there’s no opportunity for a dialog. Investor relations officers talk
willingly with analysts and there’s little difference between the role of analysts
and reporters. Some IR pros are afraid of the media and prefer not to deal with
reporters, but this does not work in today’s disclosure environment (2002).

Taking a long-term approach to business communication will be beneficial for
companies. A successful strategic communication plan includes frequent communication
with the investor relations department (Argenti, Howell & Beck 2005). The idea of
convergence should be driven by the need for functional communication and not by the

10
corporate organization chart. For example, it may be more efficient to have the investor
relations practitioner report to the CEO rather than the CFO. Regardless of how investor
relations and public relations are blended into corporate strategy, the important thing is
that they are jointly included. The coordination of investor relations and public relations
has the unique opportunity to create integrated messaging that increases corporate value
and enhances the credibility of corporate communicators as well (Turnock 2002).

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CHAPTER TWO: LITERATURE REVIEW

Research on investor relations suggests that it is an important aspect of corporate
communications. While many companies recognize the importance of a unified
communications message, there is still divergence between public relations and investor
relations departments. The importance of convergence is particularly relevant in today’s
post-Sarbanes-Oxley marketplace, when information must be disclosed as soon as
possible. In this age of intense scrutiny, the need for an integrated public relations and
investor relations program is extremely important. This review of selected literature,
journal articles and industry reports demonstrate frequent themes and ideas that are
important in the convergence of investor relations and public relations:
1. What Investor Relations Is and Is Not
2. The Investor Relations Practitioner and Immersion in Company Culture
3. Working to Integrate Investor Relations and Public Relations
4. Corporate Scandals and Their Influence on Corporate Communications
5. Opening the Lines of Communication between Public Relations and Investor
Relations

12
What Investor Relations Is and Is Not

In reviewing more than 40 sources, it appears that one of the major problems in
fully incorporating investor relations into corporate communications strategy is that many
corporate professionals—particularly public relations practitioners—do not have a
complete understanding of how exactly to define investor relations.
The concept of the investor relations function has evolved gradually, primarily as
a function within corporate communications sectors of public companies and as a
consulting function within public relations firms. The purpose of investor relations is to
“accurately communicate relevant financial and non-financial information so the market
can determine the company’s value relative to its peers” (— 2002). Investor relations
practitioners are required to provide financial information to key audiences in an
understandable form. The manner in which financial communications take place has
changed drastically; in the post-Sarbanes-Oxley marketplace, emphasis is placed on
transparency, honesty and accuracy. To not do so is not only a reflection of a company’s
dubious ethics, but could mean legal consequences that could damage a company (Silver
2005).
While there are obvious differences between investor relations and traditional
public relations, some practitioners believe there is a further divide between investor
relations and what is often called financial public relations. Financial public relations,
some say, takes place in a completely different environment with different audiences than
investor relations, and requires a completely different set of skills. Where financial public
relations practitioners utilize business media to position their clients, executives, products
and services in order to create positive media imagery and favorable public opinion,

13
investor relations practitioners make sure that their client’s publicly traded securities are
at their highest value relative to the company’s earnings growth and to create an open
market for that company’s financing, restructurings or acquisitions and divestments with
financial analysts and investment banks (Silver 2005). Investor relations professionals
have strong connections with the CEO and CFO, senior management and the board of
directors, while financial public relations practitioners need to be able to read and
comprehend financial statements (balance sheets, income and cash flow statements, etc.)
and communicate these figures to Wall Street in order to be taken seriously by senior
management. Some investor relations practitioners believe that their work is catered to a
completely different audience than financial relations practitioners. The investor relations
practitioners surveyed (see survey) believed that financial public relations practitioners
dealt more with media in presenting the company’s image to the public, while investor
relations practitioners deal more with presenting the value of a company to institutional
and individual investors.
The Investor Relations Practitioner and Immersion in Company Culture

“The IR professional must be responsive to the needs of the corporation, on the one hand, and the
needs of the investor on the other, and…savvy enough to understand both.”
—A global-equity portfolio manager (Higgins 2000, 26)

For there to be efficiency in an investor relations program, the investor relations
practitioner must be a fundamental part of senior management’s “inner circle” (Higgins
2000, 26). By involving the investor relations practitioner in strategic planning, two
things can be accomplished:

14
1. The investor relations practitioner is equipped with strategic perspective, and
prepared with strategic information to be shared—as appropriate—with the
investment audience; and
2. The investor relations practitioner is assured access to and influence with
senior management, as the investor relations practitioner provides relevant
financial information to the strategic planning process (Higgins 2000, 26).
Some CEOs are recognizing the need for the investor relations function to play a
bigger role in company culture, and they are reorganizing company structure accordingly.
Investor relations initiatives—and in some cases, the entire investor relations function—
is often moved under the public relations umbrella to ensure that investors are attended to,
that corporate messaging is consistent, and to maintain positive company reputation
among all audiences (— 2004).
Aside from the issue of integration, many investor relations professionals feel that
the companies they work for are “missing the boat” due to a lack of support for the
investor relations function itself (— 2006). A Rivel Research study done in 2005 on the
challenges that face investor relations practitioners shows that the goal of recognizing
investor relations as a strategic function within corporate communications has not been
fully realized. Some interesting results from the Rivel survey include:
 While 53% of investor relations VPs attend board meetings, only 22%
make presentations to the board more than once a year
 Only 30% of investor relations VPs meet with investors without
management being present

15
 When asked “…what are the most important means or metrics by which
you measure the effectiveness of the investor relations function in your
company?” Almost all CEOs replied, “The ability to communicate the
company’s strategic message to investors;” in contrast, only 23% of
investor relations practitioners measure their effectiveness in terms of
whether or not the company’s strategy is resonating
 Even still, more than 75% of investor relations practitioners report to the
CFO, not the CEO
 Overall, investor relations practitioners are frustrated about senior
management’s lack of appreciation and support for investor relations.
Investor relations programs have a “dearth of human and financial
resources;” a typical investor relations program for an S&P 1500 company
has one investor relations professional and an annual operating budget of
$600K (Rivel Research Group 2006).
Working to Integrate Investor Relations and Public Relations

It is important for public relations and investor relations programs to be integrated
because it helps the company maintain one voice. The public relations and investor
relations functions often operate in different silos; integration between the two requires
much more than opening up the lines of communication.
As a start, investor relations and public relations practitioners must recognize the
benefits of working together. Investor relations professionals must learn more about
traditional public relations practices and public relations professionals must learn more
about how investor relations works; and, because both functions help to increase

16
company valuation and reputation, it would behoove both departments to recognize each
others strengths and weaknesses (— 2002). For example, investor relations practitioners
feel that their contemporaries in public relations would benefit not only from learning
common financial terms and their meanings. Most PR academics and professionals
believe it is essential for PR practitioners across the board to understand financial
statements. Likewise, investor relations practitioners would benefit from learning
communication skills, as many of them come from accounting or treasury backgrounds
(— 2002). Similarly, professionals in both investor relations and public relations must
eliminate negative stereotypes of each other. The idea that investor relations practitioners
are highly analytical and have no capability of being inventive, while public relations
practitioners have creative minds and are afraid of numbers needs to stop in order for
both functions to work together effectively (Turnock 2002).
In addition to the differences in skill sets and day-to-day activities, investor
relations and public relations practitioners are often separated by different reporting
structures. While it is more common for the public relations department to report to the
CEO, the investor relations department usually reports to the CFO. It is often difficult for
different departments to meet and be updated on important issues within the company (—
2002). There are also inconsistencies in how non-financial information is communicated
to and through investor relations practitioners. Even though investor relations
professionals speak to analysts on a frequent basis, in many companies they are not
allowed to speak with financial media—such discussion is left to the public relations or
media relations representative—and there is often inconsistency in messaging (— 2002).

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Corporate Scandals and Their Influence on Corporate Communications

As noted earlier, over the past decade, the financial community has been rocked
by a number of corporate scandals. The corporate governance crisis has made it necessary
for both investor relations practitioners and public relations professionals to reassess their
communication methods, both with key audiences and each other. Corporate governance
has made it necessary for public relations and investor relations departments to work with
one another in a time where investor confidence is waning. The financial news media
plays a major role in shaping public perception of companies, and investor perception of
a company’s corporate structure—one of the many intangibles discussed earlier—could
greatly affect that company’s stock price (Cole 2004, 61).
The corporate governance issue has been a defining moment for public relations
and investor relations departments. Both functions had the opportunity—and perhaps
obligation—to right what was wrong, to “blow the whistle,” so to speak, on corporate
scandals, and yet none said anything. Both investor relations practitioners and public
relations practitioners ask for a seat at the management table, more involvement in
decision-making and more respect as counselors to management. Yet with those rights
come responsibilities; practitioners should “speak up when things are wrong [and] act to
get them changed” (Macintosh 2004).
With the introduction of Sarbanes-Oxley, both investor relations practitioners and
public relations professionals are required, by law, to act responsibly. This act has created
a new means for practitioners to use their media communications skills. Additionally,
SOX has made it more important for investor relations and public relations departments
to work together. Many variables have led to the increased need for a combined public

18
relations and investor relations function: accounting shenanigans, regulatory reforms, the
information revolution and the Internet, shareholder activism and Securities and
Exchange Commission investigations (Silver 2005). Companies must no longer
communicate one message to Wall Street and another to the media; otherwise, they will
suffer in both reputation and valuation.
Another variable propelling the convergence of investor relations and public
relations functions is transparency. Both individual and institutional investors are
demanding more transparency from companies. Government agencies are demanding
transparency as well, with SOX, Regulation FD and Regulation G as evidence that
transparency is “no longer simply a question of corporate ethics but as serious violations
of the law, with potential punitive consequences” (Silver 2005). When communicating
SEC Filings, the investor relations practitioner cannot spread false or deceiving
information and should inform the public relations practitioner of all disclosure details; to
not do so could end in legal consequences detrimental to the company.
A major key to good corporate governance is presenting information with a
coordinated strategy. The company’s story and financial history must be presented to
investors, analysts, media and other target audiences using the same communications
messages. This requires the full corporate communications team to be integrated, with a
specific emphasis on the public relations and investor relations departments (as they are
responsible for corporate messaging).
Opening the Lines of Communication between Public Relations and Investor Relations

A common theme throughout the research has been that the disciplines of investor
relations and public relations should join forces to demonstrate to management how an

19
integrated corporate communications agenda benefits the bottom line. The question at
hand is how the lines of communication should be opened between these two functions,
as they have historically been separated from one another.
The barriers between the investor relations and public relations functions are two
fold. One of the main barriers is the difference in reporting structures. Investor relations
practitioners commonly report to the CFO, while public relations practitioners commonly
report to the CEO or CMO, causing little interaction between the two silos. Another one
of the main barriers is the difference in backgrounds. Traditional public relations
practitioners usually come from some sort of communication-based background, while
investor relations practitioners often come from accounting or financial service
backgrounds. Thus, both investor relations and public relations practitioners need to gain
a greater understanding of what the other discipline does. Public relations practitioners
need to gain a better overall sense of business and understand basic financial information,
while investor relations practitioners need to gain a better understanding of the
communications function (— 2002). Additionally, experts suggest that public relations
practitioners can communicate better with the investor relations department by:
 Volunteering to work on investor relations-related projects like the
annual report.
 Attending meetings conducted by the CFO or the investor relations
department.
 Regularly reading investor materials and financial information
such as the Wall Street Journal.
 Tapping their firm or agency for help.

20
 Taking business courses or NIRI educational courses.
 Simply getting to know each other (— 2002).
As previously stated, companies also need to work to make the lines of
communication more open. Traditionally, corporate communications departments have
been siloed, with public relations and investor relations divided by different reporting
structures. The difference in reporting—public relations typically reports to the CEO
while investor relations typically reports to the CFO—causes major problems in
communications between the functions (Turnock 2002).
It has become increasingly important for management to support both the investor
relations and public relations functions—practitioners of both departments need to have
access to both the CEO and the CFO. Both departments want a seat at the management
table and more respect from higher management; for investor relations practitioners, it
has been increasingly difficult to get support for and appreciation of the function (—
2006). For a successfully integrated program, public relations and investor relations
departments must have a similar (if not identical) reporting structure. According to the
recent GAP IV study, public relations practitioners have “enjoyed the reporting line” to
the C-Suite; among all respondents, 64% reported to the C-Suite (Swerling, Mitroff, Hall,
King, Benson & O’Boyle, 2005).
One simple method that can help foster convergence is the meeting. Getting
investor relations and public relations departments together for regularly scheduled
meetings helps both functions—investor relations practitioners are allowed in on the
public relations brainstorming process, and public relations practitioners are given the
opportunity to see how investors perceive the company (Stock 2002). Yet it is important

21
for public relations practitioners to understand that investor relations cannot focus on
public relations-type communication, as noted by one director of investor relations:
There is no space for [public relations] in [investor relations]—[investor relations
practitioners] cannot choose which bits of financial information to disclose; we
must talk about the bad bits as well. It’s important to help the market understand
the financial performance of the company, if only so they can recognize good
performance when they see it. [Investor relations can apply to public relations
through] consistency and context of messaging (Stock 2002).

Communications between the functions can also be improved by practitioners
shifting their perceptions. As mentioned above, public relations practitioners need to
realize that some typical PR practices are not suitable for investor relations. Similarly,
public relations professionals need to be more sensitive to effects of financial issues on
how and why shareholders are interested in a company. Investor relations practitioners
need to think outside of the financial issues box and begin to think more about how
investors’ perception of a company can affect its reputation (— 2004).
The key to better communication is an integrated message. Investor relations and
public relations department must make sure they understand each others’ goals and
company goals in order for communication to be at its highest potential. This works best
when the investor relations and public relations functions are not siloed, but working
closely with one another. Placing the communications functions in the same place allows
for a better chance of communicating a unified message to audiences.

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CHAPTER THREE: CASE STUDIES

The New York Times Company: News. Information. Entertainment. Integrated.

The New York Times Company was founded in 1851 as a daily newspaper. Over
150 years later, the company has grown to become one of the top international media
companies. Several media properties fall into the Times Company umbrella:
 Print media, including The New York Times, The International Herald
Tribune, The Boston Globe and more than 15 other daily newspapers;
 Broadcast media, including nine network-affiliated television stations and
two New York-based radio stations;
 Internet media, including NYTimes.com, Boston.com, About.com, and
more than 30 additional Web sites (Argenti 2005).
In 2005, Times Company received its 5
th
consecutive No. 1 ranking in Fortune
magazine’s list of “America’s Most Admired Companies.” Times Company’s purpose is
to “enhance society by creating, collecting and distributing high-quality news,
information and entertainment,” and it does so with 2005 revenues of $3.4 billion and
numerous journalism awards, including more than 100 Pulitzer prizes (Argenti 2005).
The Times Company understands the importance of an integrated
communications function, which is reflected in the company’s organizational structure.
The integrated function falls under the responsibility of Len Forman, Times Company’s
executive vice president and CFO. The VP of corporate communications, Catherine
Mathis, reports directly to Forman and manages a department of 12 people in the
following areas: investor relations, public relations, crisis communications, online

23
communications, corporate awards program, media relations and speech writing (Argenti
2005). Following is an organization chart of the Times Company:

Figure 4.1: The New York Times Company Organization Chart (Argenti 2005)
One of the major reasons why the Times Company’s integrated function is so
esteemed is Mathis, who brings a strong background in both general business
management and investor relations; in 1997—and despite the fact that the company had
been public since 1969—Mathis became the first full-time investor relations practitioner
hired. Within a year, Mathis and her IR team earned the Association for Investment
Management and Research award for the publishing industry’s “Most Improved Investor
Relations Program” (Argenti 2005). Mathis previously held various positions at the

24
International Paper Company, including: market research analyst; shareholder
communication manager; business systems manager; and sales analysis manager.
Much credit must also go to the Times Company’s CEO, Janet Robinson, who
understands how important an integrated communications function is in driving overall
business strategy and implementation. Robinson has been successful because she
recognizes and tailors communication to different audiences; specifically, employees and
the public. Robinson’s take on integrated communications describes how the company is
supporting its primary objectives while embracing a changing media industry landscape:
[The New York Times Company is] strategically committed to being the finest
news gathering organization, and this extends to all media platforms…not just
print. We have to communicate this to the work force so that it is relevant to
them. And then we must communicate it externally to the world—this demands
an integrated function. (Argenti 2005).

The company began integrating its communication functions in the late 1990s.
With the development of new technology and broadening of information channels, the
media industry landscape was changing. The integration came from the realization that
the communications functions needed to work better together; as the competition shifted
its outlook, Times Company had to, as well. Says former Times Company president and
CEO Russ Lewis, “Before IR and corporate communications were integrated, we didn’t
have problems, but we failed to take advantage of opportunities. There wasn’t one robust,
holistic message. We were defensive, not offensive” (Argenti 2005).
Indeed, the importance of the company speaking in one voice currently drives
communication strategy. Robinson ensures that all employees understand the company’s
message, and that the message is fully ingrained in senior leadership. Robinson and

25
Mathis worked together to create programs, processes and procedures that allow the
communications group to:
 Proactively communicate messages that supported the overall
business;
 Manage the multiple issues that arose on a daily basis;
 Speak with one voice to varied constituencies (Argenti 2005).
Mathis created a set of behavioral best practices called “Rules of the Road,”
which is included on the company’s Intranet and placed in company reviews (an
example: “Information is power. Share it”). This has helped create a culture of
information sharing that has helped to streamline the function’s communication and
organization. Another tactic Mathis used was to create a Communications Council. The
group, which is made up of executives from various functions within the company
(including HR, broadcast, digital, regional newspaper executives, etc.), meets monthly to
discuss new ways to organize ideas and resources in different functions throughout the
organization (Argenti 2005). Additionally, the corporate communications team meets
weekly, and will invite employees from other departments if they are working on
something that will affect them.
Every month, Mathis sends out a communications report which outlines key
messages, things the group accomplished in the previous month and things that are
scheduled for the upcoming month. This report is sent to senior management and the
Communications Council. Mathis also developed a conference program to assess the
company’s entire strategic system. 2005’s Leadership Conference, a three-day event, was

26
a program for over 160 New York Times Company managers. Outside business leaders
were brought in to lead lectures and discussions, including:
 Robert Nardelli, chairman, president and CEO, The Home Depot—Spoke
on changing culture through taking risks and discipline;
 Jack Brennan, chairman and CEO, The Vanguard Group; William Lauder,
president and CEO, The Estee Lauder Companies; and Amy Pascal,
chairman, Motion Picture Group, Sony Pictures Entertainment—Spoke on
a panel that explored customers and measuring their value;
 Fred Smith, chairman, president and CEO, FedEx—Addressed the issues
of speed, agility and innovation (Argenti 2005).
As Robinson and her colleagues recognize the increasing importance of integrated
communications and the technological advances of the Internet, they worked to create a
way to keep company members involved and informed about company issues. Robinson
created a newsletter/Web page called “We Want You to Know,” which is distributed to
all employees. It covers relevant company information, key IR information and an
interactive feature where employees can send and receive responses from Robinson.
Because the newsletter is online, management can find out exactly how many people are
reading it and what sections are most popular.
Mathis offered helpful tips to think about when an investor relations practitioner
is pushing towards an integrated corporate communications function:
1. He/she must position the overall opportunity appropriately to executives. Says
Mathis, “I’d sell integration as a data-driven decision—something that saves
money, show the number of shareholders who are employees, show the

27
media/analysts/IR nexus, the morphing of constituents and the need to manage
those issues proactively.
2. When selling integration, he/she must approach the right manager. “I would
position myself with the right boss, who understood communication and was
willing to take risks,” says Mathis.
3. Having the right skill set. The most effective communications managers have
the ability to understand the numbers and think strategically, not just
tactically: “A financial framework is important—the ability to understand and
speak the language of finance, as well as the language of
communications….You must have both the vision and the ability to
understand the details that make up the vision.”
The Times Company’s success can be attributed to the foresight of Robinson and
Mathis, who turned the corporate communications function into a successful integrated
function. This can be summed up best by Mathis, who sees the company’s progress in its
corporate communications staff:
The lifestyle of an integrated function is fully engaged—the integrated world is
much less orderly than the IR world. There is always a fire to put out, a crisis du
jour. The IR world is much more orderly. It takes courage to integrate, and you
have to have the stomach for a broader array of projects and challenges (Argenti
2005).

FedEx: Integrated Communications? Absolutely, positively.

Federal Express Corporation (now known simply as FedEx) was founded in 1971
by Fred Smith, a former U.S. Marine and Yale University graduate. The company has
grown remarkably since its beginnings as a pioneer in the air/ground overnight shipping
sector. Currently, the company reports just over $32 billion in revenues, in part due to its

28
varying services—transportation, e-commerce and business (Argenti 2005; Yahoo!
Finance).
There are currently seven companies under the worldwide FedEx umbrella:
FedEx Custom Critical, FedEx Express, FedEx Freight, FedEx Ground, FedEx Kinko’s
Office and Print Services, Fed Ex Services and FedEx Trade Networks.
With all of those operations, it is extremely important for FedEx to have strong
communication. Current executives at the company strongly believe that
“Communication is the center of everything [at FedEx]…you can’t execute it if you can’t
communicate it” (Argenti 2005).
The company has always placed strong emphasis on communication. According
to founder, chairman, CEO and president Fred Smith, the company philosophy is “Shoot,
move, communicate” (Argenti 2005). This philosophy was put into action and truly
embraced by employees, in part because Smith is such an active part of the infrastructure,
even as the company has grown to nearly 200,000 employees. He expects employees to
be fully aware of situations and believes in keeping employees in the loop. Says one
FedEx executive, “Fred reviews the communication strategy for every major
decision…He wants to stay in touch with the infantry. He communicates with people
doing the job” (Argenti 2005).
The chain of command at FedEx is a completely integrated communications
function, led by William Margaritis, corporate vice president, worldwide communications
and investor relations. Margaritis oversees the function which includes public relations,
employee communications, community relations, investor relations and reputation
management. Following is an organization chart of FedEx:

29

Figure 4.2: FedEx Organization Chart (Argenti 2005)
Margaritis believes that integrated communication is a crucial part of the success
(or failure) of a business. Thus, he makes sure that he has constant interaction and
“knowledge sharing” with the entire corporate communications staff, specifically James
Clippard, Vice President, Investor Relations and Eric Jackson, Vice President, Corporate
Communications. Margaritis spends equal amounts of time with both executives, both
separately and together, to guarantee integration.
Over the years, Margaritis has played a major part in FedEx’s communications
program. He joined FedEx in 1997 and led the company through numerous crises, re-
branding initiatives, employee change management programs, acquisition, and a new go-
to-market strategy. Under Margaritis, FedEx was ranked in Fortune magazine’s list of the
top 10 “World’s Most Admired Companies” and the Harris Interactive/Reputation
Institute’s list of the best corporate reputations (Argenti 2005).

30
While the communications function had been integrated by the time Margaritis
arrived, his focus, determination and collaborative work with the team moved the
function to the next level. When Margaritis joined the company, it was in the midst of a
massive global expansion. With the changing industry landscape, Margaritis realized that
there were new things that FedEx had to deal with, including corporate governance issues,
a new go-to-market strategy, new customer expectations, societal demands (both
legislative and consumer based) and increased complexity of businesses and
constituencies (Argenti 2005). Margaritis stressed to his team the importance of
communicating with all audiences throughout the reorganization process; the FedEx
corporate communications team managed to increase the company’s reputation by
delivering unified messages to its audiences.
The integrated corporate communications function runs under the phrase, “One
Vision, One Voice.” This allows the team to more efficiently deal with key audiences.
Also, Smith makes sure Margaritis is involved with all major decisions. A FedEx
employee notes about the relationship between Smith and Margaritis:
Bill is locked at the hip with Fred [Smith]—he’s involved in all major decisions.
[Margaritis] was brought in immediately when the company knew they had to
make voluntary employee reductions…it was a question of how to communicate
it internally and maintain employee loyalty but also to the Street to capture the
benefits (Argenti 2005).

The support for integrated communications from the CEO helps Margaritis and
the corporate communications group approach their activities with a positive outlook.
Clippard and the IR team frequently meet with Margaritis to devise investment
positioning strategies; they work to recognize what matters to investors and use that
knowledge to shape messaging and press materials around FedEx’s financial issues.

31
Margaritis acknowledges the importance of the press release, but places heavy emphasis
on the positioning strategy:
While the press release is arguably the most powerful tool for IR, in terms of
reporting numbers, crafting the story and establishing the positioning strategy is
incredibly important. The integrated function comes in by taking the numbers
and aligning them with the positioning strategy…it all has to work together so
that constituents find the release compelling. It’s a real balancing act between the
numbers and positioning. There has to be tremendous collaboration and
alignment between Communications and the office of the CEO (Argenti 2005).

Margaritis realizes that the need for a unified message is extremely important to
company valuation because of the growing number of savvy investors. Most investors are
recognizing the importance of intangibles—like company reputation—when making
investment decisions. Margaritis and his team work to increase the power of intangibles
like strategy, innovation, leadership, corporate responsibility, etc. to further increase
company value.
Margaritis and his team stress the importance of speaking in one voice. All
employees must have knowledge about the goings-on of the company. Thus, the
corporate communications team crafts messages and monitors the FedEx Television
Network (FXTV), one of the world’s largest private satellite broadcast systems. This is
an important informational tool for the company, which produces a daily 10-minute
segment updating employees on important corporate information (Argenti 2005).
The integrated function has served FedEx well. Margaritis believes that having an
integrated approach to communication and consistent messaging has helped to increase
the external perception of the brand. It was extremely important when FedEx launched its
various sub-brands and when the company performed massive layoffs in 2001.

32
Margaritis offered helpful tips for establishing an integrated corporate
communications function:
1. Integrated communication officers need a broad skill set to be effective.
Margaritis believes that the ideal candidate will be “adept at influencing and
changing behaviors, opinions and attitudes, not only about investments, but also
about an entire company. That is why the communications manager has to
understand and have expertise in the numbers side and the strategic
communications side…[he/she] must have a multifaceted skill set that
incorporates an international acumen, a legislative grounding, a global outlook,
financial expertise, savvy media skills and business acumen.”
2. Integrated communication officers must have the ability to build and cultivate
strong relationships within the company (but outside of the function). “The
communications officer must be more than just a person who is known to get the
information out. …Rather, he or she must build credibility throughout the
organization, as a person who understands the business. He or she must take a
collaborative approach and partake in relationship-building outreach.”
3. Executive-level support is imperative. This is a major issue to consider when
attempting integration. Senior management support will allow the function to be
effective; without it, there will be less-than-desirable benefits. Margaritis says,
“When integrating, you need to have a broad arsenal of information and strategy
available for your use. …You must have the knowledge and power to drive
decisions.

33
4. Communication managers must share their knowledge with those at the business
unit level. Coordinated messaging only works as well as the channels through
which they are communicated. It’s not just about what is being communicated,
but how it’s being done.
5. Leadership skills. In order to be successful, Margaritis believes one has to be a
good leader and have strong motivational skills. The ability to bring diverse ideas
and perspectives to a discussion is helpful (Argenti 2005).
Margaritis’ view on integrated communications can best be summed up by this quote:
…there is an inescapable transparency in today’s business world. Financial
markets, customers, employees—all constituents—are inextricably linked and
interdependent. Therefore, it only makes sense if all the communications are
connected, with a holistic view. And to that end, sophisticated, well-versed
business-people who can speak the language need to be the ones crafting the
messages and communicating (Argenti 2005).

General Electric: Bringing Investor Relations to Life
More than 50 years ago, executives at General Electric expanded their public
relations division to include a sector called investor relations. The purpose of this sector
was to communicate company messages and financial information to the investment
community, who, at the time, was primarily individual and not institutional (— 2002).
Since then, General Electric (GE) has been looked at as a corporate pioneer with a long
chain of successful top managers, and has frequently been praised for its strategic
credibility.
General Electric has been successful, in part, due to its claims that its approach
was carefully planned, not accidental. Yet in its 1988 annual report, two major
disappointments were noted: a quality problem with its refrigerator compressors led to an
expensive replacement program; and a share price (17 percent) that did not match

34
General Electric’s strong market performance (around 19.4 percent shareholder return on
equity). Additionally, the company’s cash flow and balance sheet remained strong
(Higgins 2000, 9). Where was the problem? The company began to notice that outsiders
thought its strategy was unfocused. The General Electric strategy, the essence of
simplicity, was consistent with those within the company but not consistent with other
key audiences. The company owned up to this in the Shareholder’s Letter that
accompanied the 1988 Annual Report: “Perhaps a strategy that appears to us crystal clear
and consistent—because we live by it—seems less so to some of our constituencies in the
media and financial community. This is more likely a failure of our communication
efforts” (Higgins 2000, 10). The remainder of the Shareholder’s Letter was dedicated to
fully and comprehensively explaining General Electric’s corporate strategy.
It is interesting that General Electric found itself in this position, as the company
and its then-chairman, John F. Welch Jr., were open about its strategy and business plan;
the company had also received honors for outstanding corporate communications. While
General Electric’s price-earnings ratio naturally declined after the stock market crash of
1987, the problem was not directly with performance or unsuccessful communications or
the credibility of top management (Higgins 2000, 10). The problem was with the
perception of General Electric’s corporate strategy: the essence of simplicity did not
match up with some of the company’s acquisitions and divestments. Thus, analysts and
market experts were led to believe that General Electric had an unclear view of itself; its
strategy of acquisitions and divestments was completely inefficient (Higgins 2000, 10).
A mere ten years later, Welch was acknowledged as one of the greatest corporate
leaders of the century. Welch was credited with setting “a new contemporary paradigm

35
for the corporation that is the model for the 21
st
century” (Higgins 2000, 10). In fact, with
Welch’s expertise, General Electric experienced superior market growth: in 1981, the
year Welch became chairman and CEO, General Electric’s market value (see glossary)
was about $12 billion; in 1998, General Electric’s market value was about $280 billion,
meaning Welch increased the actual value of General Electric by over $250 billion in a
little over 15 years, an incredible feat. He created strategic credibility for General Electric
in part because of its constant and open communication with the financial and investment
community. General Electric’s investor relations program is praised as one of the best
because of this communication, and shareholders have reaped the benefits—it has been
reported that General Electric shareholders have received the greatest increase in
shareholder value in American business history (Higgins 2000, 16). In addition, General
Electric’s investor relations program has received high praise from many groups,
including the Association for Investment Management and Research, who in the mid-
1990s offered this review of General Electric’s corporate communications procedures:
The investor program of…General Electric is excellent. The company’s annual
report is essential reading for analysts and investor relations professionals. The
Chairman’s Letter clearly states the company’s strategy, decision-making process
and direction. General Electric’s investor relations professionals are accessible
and responsive. The company has arranged frequent information meetings on
specific business units and recently has begun to hold meetings to discuss how
themes such as globalization and service are being implemented in [General
Electric] operating businesses. Presentations at least twice a year by the chairman
offered significant insight into company and industry issues as well as investor
concerns (Higgins 2000, 16).

Today, General Electric is still seen as a leader in investor relations. Its current
model for strategic growth includes seven initiatives to create “high margin, capital
efficient growth:” growth platforms, technical leadership, services, commercial
excellence, globalization, culture of innovation and leadership & metrics (www.ge.com).

36
Even though Jack Welch is no longer chairman and CEO, the General Electric standard
of simplicity still thrives within the company’s corporate structure under Jeffrey Immelt,
and attests to the strength of its investor relations program.
Dell: Direct Communications
Despite recent controversy surrounding exploding computers, Dell has made a
name for itself as a successful model for integrated corporate communication. When Dell
Computer Corporation began in 1984, founder Michael Dell was one of many new
computer entrepreneurs. Even in the early 1990s, Dell was ranked last out of 25 computer
manufacturers (Holzner 2006, v). By the end of the decade, however, Dell was listed as
one of Fortune magazine’s 500 largest companies, and had acquired the largest market
share in the United States personal computer market. Now operating as Dell Inc., the
company employs 55,000 people and generates annual sales over $49 billion (Argenti,
Howell & Beck 2005). Dell will look to continue its domination in the technology
industry by utilizing and strengthening its business model.
Dell’s secret to its business success is in its messaging: Dell Direct. The phrase
not only describes the company’s business model, it describes how Dell relates to all of
its key audiences—customers, shareholders, employees and competitors. Dell executives
believe that strategic communication is important. The company’s communications plans
integrate strategy, messages, Wall Street, employees and the media. Says Dell CEO
Kevin Rollins, “You have to modify messages by constituency. Which elements of the
overall strategy do you want to discuss with each constituent? The communication
function breaks strategy into pieces and sells the right pieces to the right audience”
(Argenti, Howell & Beck 2005). Yet all communication between audiences contains the

37
Dell Direct message; the company makes sure the phrase (or some form of it) is
mentioned in all communication activities.
Dell’s integration between corporate communications and investor relations has
proven successful for the company. Integrated communication must exist because
company messages must sound unified, as if they are from one place (Argenti, Howell &
Beck 2005). Dell maintains this via constant organizational communication. Dell
employees are encouraged to use the Internet as well as Dell’s internal intranet for
communication. Michael Dell’s theory is that the business needs to be competitive 24
hours a day, seven days a week; thus, Dell stresses the need for real-time communication.
Emails, instant messaging and the intranet are important communications tools used
constantly by Dell employees (Holzner 2006, 130).
Additionally, there is an understanding at Dell about the importance of finances.
When Dell CFO Jim Schneider arrived at the company, he was happy to find that there
was strategic focus on financial issues: “Fortunately…Dell’s staff understands [the
burden of reporting financial forecasts]. ‘Everyone here is very analytical and has a good
finance bent…They know that if they’re not focused on finance, we can’t survive’”
(Holzner 2006, 131). Dell has also maintained its position by focusing on profitable
growth, rather than growth for its own sake. Michael Dell recognizes the importance of
growth for any public company, but only allows the company to “grow where it makes
sense” (Holzner 2006, 141). In fact, Dell’s focus on profitable growth is one of the
reasons the company consistently increases its margins, despite overall industry losses.
Structurally, Dell understands the need for integration. In its early stages, Dell
functioned with a more traditional corporate structure—departments for finance, sales

38
and marketing, manufacturing and product development. As the company grew, the
functions began to work separately and the company’s communication became less
unified. It was then that Michael Dell realized the importance of integrated
communication: “Without a clear vision of how each division contributed to the
company’s overall well-being, the managers of the different functional groups had begun
barricading themselves in their own silos and had begun to think primarily of promoting
and protecting their own group’s interests” (Holzner 2006, 118). Now, Dell’s
communications structure is extremely effective. Lynn Tyson, Dell’s VP of Investor
Relations and Corporate Communications, attended numerous operations and functional
meetings to thoroughly learn about the company. She believes that “for IR to be proactive
and effective, IR needs to understand what happens in the company” (Argenti, Howell &
Beck 2005).
Dell has evolved from a small-time business created in a college dorm to a
functionally integrated business success. Dell’s success can partly be contributed to its
business model, which demands that all segments within the company to be in constant
communication with one another. Dell’s early business failure points to its segregated
communication structure; yet once it recognized the importance of a strong strategic
communications plan that could be aligned with the company strategy, its business
positioning was enhanced. With a specific emphasis on the importance of finance and
sales, Dell’s communication plan incorporates investor relations in strategic planning in a
way that many companies do not. Current issues notwithstanding, Dell has proven to be
an innovator in communicating with its key audiences, and it will be interesting to see
how the company’s corporate communications plan weathers it through this current crisis.

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CHAPTER FOUR: METHOD

Background and Study Purpose

In 2006, a small, informal study was conducted on perceptions of the investor
relations industry. The primary goal was to gain a better idea of public relations
practitioners the perception of investor relations, and judge that against what investor
relations practitioners say about their work. The study was also informally designed to
shed light upon what public relations students’ perception of investor relations are and
whether or not those perceptions are correct. From there, analysis can be done to
determine how students can be exposed to more comprehensive investor relations course
offerings in their communication studies programs. This way, the recent graduates of
communications programs will have a working knowledge of investor relations and will
be more understanding of the importance of and need for the silo.
This research looked at three groups:
 Investor relations practitioners, to see what they are saying about
their profession.
 Public relations practitioners, to see how they perceive investor
relations.
 Public relations/Communications students, to see what their
understanding of investor relations is.
Key areas of inquiry include:
 Establishing the difference (if any) between investor relations and
financial public relations.

40
 Measuring the importance of the investor relations function in a
public relations firm.
 Determining what each group perceives the daily duties of investor
relations practitioners to be.
 Identifying what investor relations practitioners and public
relations practitioners need to do in order to effectively work
together.
Methodology
The Internet study involved emails to approximately 115 investor relations
practitioners, public relations practitioners, and students. A total of 35 people from all
three groups responded, resulting in an overall participation rate of approximately 30%.
Some things to note:
1. Each survey was done via SurveyMonkey.com, a Web site that allows users to
create and analyze their own surveys.
2. Each survey was designed specifically for the target audience. The survey for
investor relations practitioners, for example, had different questions than the
survey for public relations practitioners. All surveys had a combination of
multiple choice and essay questions.
3. Each survey was filled out anonymously. Participants were not asked to
provide identifying details about themselves or their profession/student work.
4. The investor relations survey was given to two practitioners who then passed
the survey on to their peers, and so on. Thus, the exact number of recipients is
unknown.

41
5. The public relations survey was given to two practitioners who then passed
the survey on to their peers, and so on. Thus, the exact number of recipients is
unknown.
6. Survey responses were collected from October 2006 to March 2007.
Investor Relations Practitioners
Approximately 15 investor relations practitioners were polled via email survey to
examine their opinions and perceptions of their profession. Practitioners polled worked
in-house and at agencies. The survey consisted of six questions.
Public Relations Practitioners
Approximately 40 public relations practitioners were polled via email survey to
examine their opinions and perceptions of investor relations. Practitioners polled worked
in-house and at agencies. The survey consisted of six questions.
Students
Approximately 60 communications and public relations students were polled via
email survey to examine their opinions and perceptions of investor relations. The students
polled included first and second year graduate students and junior and senior
undergraduate students. The survey consisted of five questions.

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CHAPTER FIVE: RESULTS

Question: What comes to your mind when you think of investor relations?
Answer: “Complete and total mind numbing boredom…”
--Student survey response, 2006

Investor Relations Practitioner Surveys

An email was sent out to approximately 15* investor relations practitioners
(*Note: Exact number of participants unknown because of email pass-ons). The email
contained the link to the online survey, which was completed by six participants
(approximately 40%). The investor relations survey contained a total of six questions—
three open-ended questions and three ranking questions. Practitioners were asked to be
open and honest with their responses. The results are as follows.
Question One: To what extent do you agree with the following statement:
Investor relations is an important part of the overall public relations function.
*The scale was as follows: strongly agree, somewhat agree, neither agree nor
disagree, somewhat disagree, strongly disagree.
All six investor relations practitioners answered this question, and their answers
are as follows:

43

Figure 6.1: Investor Relations Survey Question One

Not surprisingly, almost all (83%) of the respondents stated that investor relations
is an important part of the overall function, rating this statement “strongly agree.” About
17% of respondents somewhat disagreed with the statement. This is somewhat surprising
coming from people within the industry.
Question Two: Based on your knowledge of investor relations, rate investor
relations practitioners based on the following series of statements:
 Investor relations practitioners have the ear of the CEO.
 To be an investor relations practitioner you must be a math whiz.
 Investor relations practitioners can get fired if they mess up numbers.
 To be an investor relations practitioner you do not need to know
traditional public relations skills.
 Investor relations practitioners do not deal with media.
All six investor relations practitioners answered this question, and their answers
are as follows:

44

Figure 6.2: Investor Relations Survey Question Two

Most respondents had a positive perception of the investor relations practitioner’s
duties. The first statement, Investor relations practitioners have the ear of the CEO, was
rated “neither agree nor disagree” by half of the respondents. About 33% of respondents
strongly agreed with that statement, and about 17% of respondents somewhat agreed with
that statement. The second statement, To be an investor relations practitioner you must
be a math whiz, was also rated “neither agree nor disagree” by half of the respondents.
About 33% of respondents strongly disagreed with that statement, and about 17% of
respondents somewhat agreed with that statement. The third statement, Investor relations
practitioners can get fired if they mess up the numbers, was rated “somewhat agree” by
half of the respondents. About 33% of respondents strongly agreed with that statement,
while about 17% of respondents neither agreed nor disagreed with that statement. The
fourth statement, To be an investor relations practitioner, you do not need to know

45
traditional public relations skills, had the most varied responses in the series. About 33%
of respondents somewhat agreed with that statement. The other responses—strongly
disagree, somewhat disagree, neither agree nor disagree and strongly agree—were
respectively rated by 17% of respondents. The last statement, Investor relations
practitioners do not deal with media, was rated “somewhat agree” by half of the
respondents. The other responses—somewhat disagree, neither agree nor disagree and
strongly agree—were respectively rated by 17% of respondents.
Question Three: What do you think investor relations practitioners and public
relations practitioners need to do in order to communicate better?
All six investor relations practitioners answered this question. All respondents
believed that public relations practitioners need to understand the business and
understand the audience. Their verbatim responses can be found in Appendix E.
Question Four: What (if any) is the difference between investor relations and
financial communications?
All six investor relations practitioners answered this question. Most respondents
cited that the differences between the disciplines are the audiences practitioners cater to.
Two answers stood out, however:
 Two completely different audiences.
 No difference that I can see.
Verbatim responses can be found in Appendix E.
Question Five: What is your background (check all that apply):
 Accounting
 Business

46
 Corporate Communication
 Economics
 Finance
 History
 Mathematics
 Public Relations
 Other (please specify)
All six investor relations practitioners answered this question. Respondents were
asked to check all answers that applied. About 66% of respondents chose business and
finance as their backgrounds. About 33% said their background was in corporate
communication. About 17% of people chose accounting, economics and public relations
(respectively). About half of respondents chose “other” as their background. When asked
to specify, their verbatim responses were:
 Investor Relations Web Communications Manager
 Corporate Strategy and M&A
 Political Science
Question Six: Do you work in-house or at an agency? Based on your
experience, what are the advantages/disadvantages of practicing IR in that
environment?
Five of the six respondents answered this question. Most respondents worked in-
house and believed that the major advantage was having direct contact with the C-Suite.
Their verbatim responses can be found in Appendix E.

47
Public Relations Practitioner Surveys

An email was sent out to about 40* public relations practitioners (*Note: Exact
number of participants unknown because of email pass-ons). The email contained the
link to the online survey, which was completed by seven participants (approximately
17%). The public relations survey contained a total of six questions—one open-ended
questions and five ranking questions. Practitioners were asked to be open and honest with
their responses. The results are as follows.
Question One: To what extent do you agree with the following statement:
Investor relations is an important part of the overall public relations function.
*The scale was as follows: strongly agree, somewhat agree, neither agree nor
disagree, somewhat disagree, strongly disagree.
All seven public relations practitioners answered this question, and their answers
are as follows:

Figure 6.3: Public Relations Survey Question One

48
Most respondents agreed that investor relations is an important part of the public
relations function. About 57% of respondents rated this statement “strongly agree.”
About 43% of respondents rated the statement “somewhat agree.” It is interesting to note
that everyone surveyed either strongly or somewhat agreed with this statement.
Question Two: Based on your knowledge of investor relations practitioners, rate
investor relations practitioners on the following statements.
 Investor relations practitioners have the ear of the CEO.
 To be an investor relations practitioner you must be a math whiz.
 Investor relations practitioners can get fired if they mess up numbers.
 To be an investor relations practitioner you do not need to know
traditional public relations skills.
 Investor relations practitioners do not deal with media.
*The scale was as follows: strongly agree, somewhat agree, neither agree nor
disagree, somewhat disagree, strongly disagree.
All seven public relations practitioners answered this question, and their answers
are as follows:

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Figure 6.4: Public Relations Survey Question Two

Most respondents had a positive perception of investor relations practitioners. The
first statement, Investor relations practitioners have the ear of the CEO, was rated
“somewhat agree” by about 43% of respondents. About 29% of respondents neither
agreed nor disagreed with this statement. Another 17% rated this statement “somewhat
disagree” and “strongly agree,” respectively. The second statement, To be an investor
relations practitioner you must be a math whiz, was rated “somewhat agree” by about
57% of respondents. About 29% of respondents rated this statement “somewhat
disagree,” and another 17% of respondents rated this statement “strongly disagree.” The
third statement, Investor relations practitioners can get fired if they mess up numbers,
was rated “somewhat agree” by about 43% of respondents. About 29% of respondents

50
rated this statement “neither agree nor disagree” or “strongly agree,” respectively. The
fourth statement, To be an investor relations practitioner you do not need to know
traditional public relations skills, was rated “strongly disagree” and “somewhat disagree”
by about 43% of respondents respectively. Another 17% of respondents rated this
statement “strongly agree.” The last statement, Investor relations practitioners do not
deal with media, was rated “strongly disagree” by about 57% of respondents. About 29%
of respondents rated this statement “somewhat agree,” and about 17% of respondents
rated the statement “somewhat disagree.”
Question Three: Do you work in-house or at an agency?
All seven public relations practitioners answered this question. Interestingly, all of
the respondents work at an agency.
Question Four: To what extent do you agree with the following statement:
Investor relations is important in our firm.
*The scale was as follows: strongly agree, somewhat agree, neither agree nor
disagree, somewhat disagree, strongly disagree.
All seven public relations practitioners answered this question, and their answers
are as follows:

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Figure 6.5: Public Relations Survey Question Four

Most respondents agreed that investor relations plays an important part in their
firm. About 43% of respondents “strongly agree” with that statement, while
approximately 29% of respondents “somewhat agree” with that statement. About 29% of
respondents rated that statement “neither agree nor disagree,” suggesting they are unsure
of the role investor relations plays in their office.
Question Five: On a scale of 1-4, how important is it for companies to have
their investor relations and public relations programs working together?
*The scale was as follows: 1=not important, 2=somewhat important, 3=important,
4=very important
All seven public relations practitioners answered this question, and their answers
are as follows:

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Figure 6.6: Public Relations Survey Question Five

About 43% of respondents believe it is very important for a company’s public
relations and investor relations silos to work together. About 29% of respondents believe
it is important for the investor relations and public relations programs to work together,
while about 17% of respondents believe that it is somewhat important for the two silos to
work together.
Question Six: What do you think investor relations practitioners and public
relations practitioners need to do in order to communicate better?
All seven public relations practitioners answered this question. Many believed
that lack of knowledge of the other function. Several respondents mentioned that investor
relations practitioners do not know enough about public relations, and vice versa. Their
verbatim responses can be found in Appendix E.

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Student Surveys
An email was sent out to 60 graduate-level and undergraduate public relations and
communications students. The graduate students were first and second year students
(ages 22-28) and the undergraduates were juniors and seniors (ages 19-21). The email
contained the link to the online survey, which was completed by 22 students
(approximately 36%). The student survey contained a total of five questions—two open-
ended and three ranking questions. The results are as follows.
Question One: What comes to your mind when you think of investor relations?
This was the first of two open-ended questions. All 22 students answered this
question. Most of the students believed investor relations to be a complicated public
relations function involving lots of math, money and communication with Wall Street.
Their verbatim responses can be found in Appendix E.
Question Two: To what extent do you agree with the following statement:
Investor relations is an important part of the overall public relations function.
*The scale was as follows: strongly agree, somewhat agree, neither agree nor
disagree, somewhat disagree, strongly disagree.
All 22 students answered this question, and their answers are as follows:

54
Figure 6.7: Student Survey Question Two
Most of the respondents agreed that investor relations is an important part of the
public relations function. Half of all students surveyed rated this statement “somewhat
agree.” Another 36% of respondents rated the statement “strongly agree,” while 14% of
respondents neither agreed nor disagreed with the statement. It is interesting to note that
none of the respondents rated the statement “somewhat disagree” or “strongly disagree,”
especially given their initial admitted lack of understanding what exactly investor
relations is.
Question Three: Based on your knowledge of investor relations, rate investor
relations practitioners on the following series of statements:
 Investor relations practitioners have the ear of the CEO.
 To be an investor relations practitioner you must be a math whiz.
 Investor relations practitioners can get fired if they mess up numbers.

55
 To be an investor relations practitioner you do not need to know
traditional public relations skills.
 Investor relations practitioners do not deal with media.
*The scale was as follows: strongly agree, somewhat agree, neither agree nor
disagree, somewhat disagree, strongly disagree.
All 22 students answered this question, and their answers are as follows:
Figure 6.8: Student Survey Question Three
Most of the respondents had a positive perception of the investor relations
practitioner’s duties. The first statement, Investor relations practitioners have the ear of
the CEO, was rated “somewhat agree” by 55% of respondents. The second statement, To
be an investor relations practitioner you must be a math whiz, was rated “somewhat
agree” by 45% of respondents. The third statement, Investor relations practitioners can
get fired if they mess up numbers, had a tie for the top rated answer, with “strongly agree”
and “somewhat agree” ratings at 41% each. The fourth statement, To be an investor

56
relations practitioner you do not need to know traditional public relations skills, was
rated “strongly disagree” by 52% of respondents. The last statement, Investor relations
practitioners do not deal with media, was rated “strongly disagree” by 45% of
respondents. Interestingly, 9% of respondents “somewhat agree (d)” with the statement.
Question Four: Based on your perception of investor relations, on a scale of 1-5,
how important is it for companies to have their investor relations and public relations
programs working together?
*The scale was as follows: 1=not important, 2=somewhat important, 3=neutral,
4=important, 5=very important
All 22 students answered this question, and their answers are as follows:
Figure 6.9: Student Survey Question Four
Of the 22 students, 59% believed it is very important for companies to integrate
their investor relations and public relations programs. Another 23% of respondents found
it important for the programs to be working together, while responses for “neutral” and

57
“somewhat important” tied at 9% a piece. None of the respondents answered “not
important.”
Question Five: What (if any) is the difference between investor relations and
financial public relations?
This was the second of two open-ended questions. 21 of 22 respondents answered
this question. Most students are unaware of the difference between investor relations and
financial public relations. This is somewhat consistent with the literature, as some sources
use financial public relations and investor relations interchangeably while others refer to
them as completely different functions. Their verbatim responses can be found in
Appendix E.
Significant Findings/Observations

The data suggest that:
a) Not surprisingly, the majority of investor relations practitioners (about 83%)
strongly agreed with the statement “Investor relations is an important part of
the overall public relations function.” The majority of public relations
practitioners surveyed (about 57%) also strongly agreed with that statement.
About 36% of students surveyed strongly agreed with that statement; this is
interesting because students earlier admitted they know little about investor
relations.
b) In general, investor relations practitioners are not sure if they have the ear of
the CEO. Half of the investor relations practitioners surveyed were neutral,
yet the other half agreed (to varying degrees) that investor relations
practitioners have the ear of the CEO. In contrast, about 17% of public

58
relations practitioners surveyed strongly agreed that investor relations
practitioners have the ear of the CEO, while about 27% of students strongly
agreed with that statement. This suggests that most in the public industry have
doubts as to whether or not investor relations practitioners have the full
attention of the CEO.
c) Public relations practitioners recognize the importance of investor relations in
their firms. When asked to what extent they agree with the statement “Investor
relations is important in our firm,” about 43% of respondents said they
strongly agree.
d) Investor relations practitioners have mixed opinions on dealing with the media.
While half of respondents surveyed somewhat agreed that investor relations
practitioners deal with media, other responses ranged from strongly
disagreeing with that statement to strongly agreeing with that statement,
showing a wide variance between the answers.
e) Investor relations practitioners basically agreed that the main difference
between practicing investor relations and financial public relations is
audiences. Investor relations practitioners target analysts and investors, while
financial public relations practitioners target the media and the general public.
f) While most students surveyed believed that to practice investor relations one
must be a math whiz, the investor relations practitioners surveyed came from
different backgrounds; surprisingly, no one surveyed had a mathematics
background, and very few had an accounting or economics background. The
majority of respondents had either a business or finance background.

59
g) Investor relations practitioners tend to believe that there are more benefits to
working in-house compared to an agency because of direct contact with senior
management.
h) Public relations practitioners and public relations/communications students
often had little to no idea what investor relations practitioners do. When asked
“What comes to your mind when you think of investor relations,” most
responses either had the word “money” or “finance” stated. Similarly, when
asked how public relations practitioners and investor relations practitioners
can communicate better, a few of the public relations practitioners surveyed
mentioned not fully understanding what exactly investor relations people do.
In contrast, most investor relations practitioners mentioned “shareholders” and
“company valuation” when talking about what they do.
i) Results may be deceptive because of the sample respondent size.

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CHAPTER SIX: ANALYSIS
In today’s changing corporate communications field, it is increasingly important
to make sure that all avenues of communication are speaking in one voice. As previously
stated, the need for convergence is extremely vital in today’s corporate communications
world. With CEOs and spokespeople needing to be more aware of corporate governance
laws (so as not to disclose anything inadvertently), it is more important for investor
relations and public relations to work together to ensure common communication goals.
Through the research stated above, frequent themes occurred that could help investor
relations practitioners and public relations practitioners gain a better working
relationship:
1. Learning About Investor Relations at School
2. Learning About Investor Relations at the Office
3. Developing Intrapersonal Relationships
4. Reporting Lines

61
Learning About Investor Relations at School

Most of the students surveyed had little to no knowledge about what investor
relations is and what an investor relations practitioner does. It would help if public
relations and communications students were offered courses geared specifically towards
investor relations. For example, the Strategic Public Relations master’s program at the
Annenberg School of Communication at the University of Southern California has
classes where students can learn the specifics of crisis management public relations,
entertainment industry communication management, non-profit public relations and
corporate communications, but unless a student chooses to study investor relations as a
special topic, there is no specific course in investor relations (USC Course Catalogue
2006).
Syracuse University, another school with a leading public relations master’s
program, also offers students the opportunity to take a special topics course in investor
relations, but does not offer an investor relations class in its primary offerings (Syracuse
Course Catalogue 2006).
In contrast, there are several opportunities at the University of Southern
California’s Marshall School of Business to learn about investor relations-related topics,
such as finance and valuation. The majority of investor relations practitioners polled had
backgrounds in either finance or corporate communications, so it would be a good idea to
steer students interested in the field towards classes in other departments or schools.
But what about the students interested in public relations who need to know about
investor relations—especially if they plan on working for (in-house or agency) a publicly
traded company—but are not interested in or confused by the numbers? Public relations

62
undergraduate and graduate programs should make more of an effort to provide a very
basic introduction to investor relations class, which would better prepare students going
into the public relations field for dealing with the rules, regulations and financial terms
involved with the shareholder side of a publicly traded company. It will be important for
students starting out in the industry to keep the shareholder audience in mind when
creating strategic public relations plans; it will be even more impressive to the client(s)
when that plan includes well researched messages to the shareholder audience.
Learning About Investor Relations at the Office

Many of the public relations practitioners surveyed mentioned that they did not
know much about what exactly investor relations is and/or what investor relations
practitioners do. Similarly, based on the survey, investor relations practitioners have
differing opinions on their specific duties. Thus, it would be helpful to have some internal
communication materials clearly outlining the investor relations profession and outlining
the duties of the investor relations professional.
The first suggestion would be something similar to an in-office workshop.
Communications departments can bring in experts in both the investor relations and
public relations fields to lead lectures or interactive sessions that can help explain to
public relations practitioners and investor relations practitioners the ins and outs of the
other silo, as well as how both silos affect the company’s public profile and valuation.
Important communications items such as audiences, message development, Sarbanes-
Oxley, public perception and company valuation (and other intangibles), and
communicating with the media need to be discussed extensively with public relations and
investor relations practitioners. As investor relations practitioners stated in the survey, the

63
key to effective communication between the silos is having a better understanding of
audiences and knowing what to do to address the needs of those audiences.
Based on the results of the survey, it would appear that investor relations
practitioners traditionally are not dealing with the media. It would be helpful to have an
investor relations media training session in order to make sure that if and when the
investor relations practitioner has to deal with the media, he or she can communicate
clearly and ensure that the company’s key messages are getting across. Likewise, public
relations practitioners appear to need a better understanding of Sarbanes-Oxley
regulations—particularly when figuring out what information can or cannot be disclosed
in press materials—in order to successfully present the company’s image. Both groups
expressed having the ear of the CEO; perhaps the CEO and other C-Suite members
should team with senior-level investor relations and public relations practitioners to
create a one-sheet with important information about typical investor relations and public
relations practices as well as common words, phrases and tools that come up in the silos
that would confuse people who are unfamiliar with them.
As previously mentioned, it is important for companies looking to integrate their
investor relations and public relations departments to make sure the practitioners have the
right skill set. Often, public relations practitioners do not fully understand the business
aspects that support the messages, and investor relations practitioners do not fully
understand the overall communications goals and initiatives. Giving public relations
practitioners sessions in analyzing financial statements or investor relations practitioners
sessions in how to craft media messages would help to build practitioners’ skill sets in
order to effectively manage their communications.

64
Developing Intrapersonal Relationships

Perhaps the reasons for the separation between investor relations and public
relations silos are internal. As stated earlier by FedEx corporate vice president William
Margaritis, it is important for practitioners to build and cultivate strong relationships. One
of the public relations practitioners polled mentioned that mutual respect between
investor relations practitioners and public relations practitioners is lacking because
“investor relations people tend to consider themselves superior!”
This can be avoided by enlisting senior management and C-Suite support in
bonding activities. Perhaps having company picnics, outings, softball games or other feel-
good activities can help cultivate personal relationships between members of the investor
relations and public relations programs.
It is important to note the differences between practicing investor relations at an
agency and practicing investor relations in-house. In-house investor relations
practitioners (based on the survey) tend to have more contact with the company’s public
relations practitioners, so there is more opportunity for communication between the
programs. In fact, one of the investor relations practitioners surveyed suggested that
investor relations should remain an in-house function, because of the direct contact with
all the other company departments, especially the public relations side.
Reporting Lines

Typically, investor relations practitioners report directly to the CFO while public
relations practitioners report to the CEO (or another member of the C-Suite). While this
makes sense, it would help to have more open communication so that each function
knows what the other function is doing.

65
As stated earlier, integrated messaging works only as well as the means through
which they are communicated. Even though the investor relations function does not
report directly to the CEO, the CEO should be in constant communication with the senior
investor relations practitioner, making sure he or she knows—and understands—the
company’s public relations goals and strategies. Likewise, the CFO should be in constant
communication with the company’s senior public relations practitioner to make sure he or
she knows and understands what the investor relations goals are and how they fit in to the
overall public relations plan.
This open communication needs to trickle down to the lower-level employees as
well. The company should have an internal communication channel (perhaps a newsletter,
Intranet, or something similar) where practitioners can get the latest public relations and
investor relations information that will help make the functions more understandable and
relatable. In addition, a clearly stated reporting structure should be easily accessible to
practitioners, and practitioners should know who they can speak to if they are concerned
about company valuation or public perception.

66
DISCUSSION AND CONCLUSION

The research presented was designed to impact how investor relations
practitioners view the public relations practice and impact how public relations
practitioners view the investor relations practice. The survey questions were presented in
a certain way to get honest opinions from actual practitioners in the hopes that this would
shape future convergence efforts.
The findings suggest that few outside of the investor relations function fully
understand the role of the investor relations practitioner. Public relations practitioners and
communications students are generally unaware of the importance of investor relations,
especially pertaining to the company reputation. Similarly, public relations practitioners
feel investor relations practitioners are not as aware of the public relations function and
its importance to public perception. The conclusion is that both functions play an
increasingly important role in corporate communication and therefore should be
converged.
It cannot be stated enough that it is extremely important for the public relations
and investor relations silos to work together. The literature review, case studies, surveys
and analysis show that a company’s image is not only shaped by its public perception, but
by its valuation.
Shaping a company’s public perception is the work of the public relations
practitioner. The public relations practitioner uses communications tools to craft
messages tailored to target the media and the general public. Through the work of the
public relations practitioner, the public develops an opinion about a company. If the
opinion of the company is positive, it might incline more people to purchase stock in it.

67
Shaping the company’s valuation is the work of the investor relations practitioner.
Through the investor relations practitioner’s work with the shareholders, a company’s
valuation is determined. While there are several intangibles that also come into play,
company valuation greatly affects stock price, which in turn can affect the public’s
perception of the company.
It is important to note the limitations of the study. In order for more accurate
opinions of the investor relations and public relations fields, a larger sample size is
needed. This study was a preliminary investigative study. Future studies on the topic
should include a standardized questionnaire in order to more accurately measure the
perceptions of the investor relations and public relations functions.
Based on the above research, it can be concluded that a company’s image cannot
afford to have its public relations and investor relations functions operating separately.
Because the company’s image and valuation are so intertwined, the public relations and
investor relations functions must also be. By working to fit the investor relations program
into the overall corporate strategy, companies are taking steps to ensure that their image
and valuation are accurately communicated via integrated messaging and increased
credibility.

68
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Performance Link. Strategic Management Journal, 18(4), 303-319.

Yahoo! Finance. (2006). FedEx Corporation Income Statement. Retrieved December 20,
2006 from the World Wide Web:
http://finance.yahoo.com/q/is?s=FDX&annual

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APPENDIX A

GLOSSARY OF COMMON TERMS
1

Analyst
Person in a brokerage house, bank trust department, or mutual fund group who
studies a number of companies and makes buy or sell recommendations on the
securities of particular companies and industry groups. Most analysts specialize in
a particular industry, but some investigate any company that interests them,
regardless of their line of business. Some analysts have considerable influence,
and can therefore affect the price of a company’s stock when they issue a buy or
sell recommendation.
Annual Meeting
The company gathering, usually held at the end of each fiscal year, at which the
previous year and the outlook for the future are discussed and directors are elected
by common shareholders.
Balance Sheet
One of the three principal financial statements, prepared to report the balances of
all asset, liability, and stockholder’s equity accounts as of a specific date (year-
end or quarter-end in most cases). The other financial statements report
transactions over a period of time ending on the same reporting date as the
balance sheet.
Blackout Period
An interval of up to 60 days during which employees may not adjust the
investments contained in their plans. Such blackout periods often occur when the
plan is undergoing significant changes.
Board of Directors
Individuals elected by a corporation's shareholders to oversee the management of
the corporation. The members of a Board of Directors are paid in cash and/or
stock, meet several times each year, and assume legal responsibility for corporate
activities.
Buy-Side Analyst
Securities analyst who works in the research department of an institutional
investor, such as a mutual fund, and whose research is used internally by money
managers.
C-Suite
The C-Suite, also known as C-level, is a colloquial term for high level executives.
Examples include Chief Executive Officers (CEOs), Chief Financial Officers
(CFOs), Chief Operating Officers (COOs), etc.

1
Sources: Finance, Groppelli and Nikbakht, 2006; The New Investor Relations: Expert Perspectives on the
State of the Art, Cole, 2004; Annual Reports 101, Thomsett, 2007; “Using investor relations: the companies
you invest in must answer your questions,” Scott, 2004; www.investorwords.com; www.niri.org;
www.dictionary.com; Dictionary of Finance and Investment Terms, Downes and Goodman, 2003.

72
Disclosure
The revelation of a material fact that may affect valuation, profitability, or both.
Disclosures of all material information are required as part of the footnotes
section of the annual report.
Structured Disclosure
Explicit information about a company’s operating results that must be
provided in a precise manner, as stipulated in required SEC documents (i.e.
10-K, 10-Q and 8-K Forms, among others).
Unstructured Disclosure
Information that companies may disclose at will, within certain broad
guidelines (defined within the 1933 Securities Act). Includes media such
as annual reports, letters to shareholders, press releases, advertisements,
investor meeting presentations, conference calls, and telephone
conversations with investors or analysts.
Earnings per Share (EPS)
The dollar value of total earnings during a fiscal year divided by the average
number of common shares of stock outstanding during the same period.
Financial Accounting Standards Board (FASB)
The authoritative body for setting financial accounting and reporting standards.
Generally Accepted Accounting Principles (GAAP)
The standards used in the accounting industry to determine the most acceptable
and consistent methods to be used in financial reporting.
Hedge Fund
A fund, usually used by wealthy individuals and institutions, which is allowed to
use aggressive strategies that are unavailable to mutual funds, including selling
short, leverage, program trading, swaps, arbitrage, and derivatives. Hedge funds
are exempt from many of the rules and regulations governing other mutual funds,
which allows them to accomplish aggressive investing goals. They are restricted
by law to no more than 100 investors per fund, and as a result most hedge funds
set extremely high minimum investment amounts, ranging anywhere from
$250,000 to over $1 million. As with traditional mutual funds, investors in hedge
funds pay a management fee; however, hedge funds also collect a percentage of
the profits (usually 20%).
Initial Public Offering (IPO)
The first sale of a stock by a company to the public.
Insider
Someone who is deemed to have material information prior to its public
disclosure and who thus cannot trade based on that information and cannot pass
the information on to anyone else to trade on it.
Insider Trading
The practice of buying and selling shares in a company’s stock by that company’s
management or board of directors, or by a holder of more than 10% of the
company’s shares. Managers may trade their company’s stock as long as they
disclose their activity within ten days of the close of the month within the time the
transactions took place.

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Investor
A party who puts money at risk; may be individual or institutional.
Material Information
Knowledge that would cause an ordinary person to make a decision to buy, sell or
hold a stock; any information that might change someone’s evaluation of your
stock.
Market Value
The current actual value of an asset, which often is not the same as net book value.
For example, the market value of real estate may be considerably higher than the
book value, which is recorded at the original purchase price minus depreciation.
Mutual Fund
A fund operated by an investment company that raises money from shareholders
and invests it in stocks, bonds, options, futures, currencies, or money market
securities. These funds offer investors the advantages of diversification and
professional management. A management fee is charged for these services,
typically between 0.5% and 2% of assets per year. All shareholders share equally
in the gains and losses generated by the fund.
National Investor Relations Institute (NIRI)
NIRI is a professional association of corporate officers and investor relations
consultants responsible for communication among corporate management, the
investing public and the financial community.
Price/Earnings (P/E) Ratio
A ratio calculated by dividing the stock price by earnings per share expressed as a
single factor; also called the multiple of earnings.
Pro Forma Profits
Calculated profits based on estimates rather than on actual values. The Latin
means “for the same of form.” Pro forma accounting has often been abused by
accountants by overstating non-core earnings such as profits on pension assets.
Regulation Fair Disclosure (Reg FD)
Issued by the SEC, Reg FD makes it a requirement for companies to disclose
material information to all investors simultaneously as much as technologically
feasible so that no investor has an advantage over another investor.
Regulation G
A Federal Reserve Board regulation that governs the extension of credit for
securities transactions by commercial lenders and non-financial corporations.
Return on Equity
Amount, expressed as a percentage, earned on a company’s total capital—its
common and preferred stock equity plus its long-term funded debt—calculated by
dividing total capital into earnings before interest, taxes and dividends.
Revenues
The gross income of a company; its sales; the top line of the summary of
operations, before deducting costs or expenses.

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Sarbanes-Oxley (SOX)
A federal law expanding the authority and budget of the Securities and Exchange
Commission (SEC) intended to curtail conflicts of interest in several major areas:
in accounting firms performing audits of publicly traded companies, in
nondisclosures and other abuses by corporate executives, and among securities
analysts and their employers.
Securities and Exchange Commission (SEC)
The government agency that regulates and supervises stock market activities in
the United States; established via the Securities Acts of 1933 and 1934.
SEC Filings
The Securities and Exchange Commission requires publicly traded companies to
file certain reports regularly.
10-K Form
A report filed annually within 90 days of the end of the fiscal year. It
delivers important information such as the company’s business operations,
historical financial data, legal matters and other pertinent data. It is
available on many company Web sites.
10-Q Form
A report filed every quarter after a company announces its earnings. It is
designed to give a slightly broader perspective on how the quarter went.
The 10-Q gives raw earnings numbers to explain why something was up
or down and how that was different from the preceding period.
8-K Form
A document required by the SEC to announce certain significant changes
in a public company, such as a merger or acquisition, a name or address
change, bankruptcy, change of auditors or any other information which a
potential investor ought to know about.
Sell-Side Analyst
Securities analyst typically employed by brokerage firms, where their research is
used as a selling tool and made available to individual investing clients.
Shareholder
Owner of one or more shares of stock in a corporation. A common shareholder is
normally entitled to four basic rights of ownership: 1. claim on a share of the
company’s undivided assets in proportion to number of shares held; 2.
proportionate voting power in the election of directors and other business
conducted at shareholder meetings or by proxy; 3. dividends when earned and
declared by the board of directors; and 4. preemptive right to subscribe to
additional stock offerings before they are available to the general public except
when overruled by the articles of incorporation or in special circumstances, such
as where stock is issued to effect a merger.

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Standard and Poor’s 500 (S&P500)
A basket of 500 stocks that are considered to be widely held. The S&P 500 index
is weighted by market value, and its performance is thought to be representative
of the stock market as a whole. The S&P 500 index was created in 1957, although
it has been extrapolated backwards to several decades earlier for performance
comparison purposes. This index provides a broad snapshot of the overall U.S.
equity market; in fact, over 70% of all U.S. equity is tracked by the S&P 500. The
index selects its companies based upon their market size, liquidity, and sector.
Most of the companies in the index are solid mid cap or large cap corporations.
Like the NASDAQ Composite, the S&P 500 is a market-weighted index. Most
experts consider the S&P 500 one of the best benchmarks available to judge
overall U.S. market performance.
Statement of Cash Flows
One of the three principal financial statements; it reports the total of all changes in
cash, summarized in three major sections: operating activities, investing activities,
and financing activities. The period covered is a fiscal year or quarter, and the
ending date of the reporting period is the same date as the date of the balance
sheet.
Stock
Ownership of a corporation represented by shares that are a claim on the
corporation’s earnings and assets.
Common Stock
Usually entitles the shareholder to vote in the election of directors and
other matters taken up at shareholder meetings or by proxy.
Preferred Stock
Generally does not confer voting rights but it has a prior claim on assets
and earnings—dividends must be paid on preferred stock before any can
be paid on common stock.
Stockholder’s Equity
The value of investors’ interest in the organization, consisting of the difference
between assets and liabilities. Equity consists of common and preferred stock and
retained earnings (including the current year’s profit or loss), adjusted for
dividends declared and paid.
Summary of Operations
One of the three principal financial statements; it reports the total of all revenues,
costs, expenses, and profits for a specific period of time, normally a fiscal year or
fiscal quarter. The ending date of this period is the same as the balance sheet date.

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Transparency
The availability and clarity of corporate information and disclosures. Effective
transparency provides investors with complete information concerning material
facts, contingencies and commitments, and accounting policies.
Wall Street
The collective name for the financial and investment community,
which includes stock exchanges and large banks, brokerages, securities and
underwriting firms, and big businesses. Some people believe that the interests of
these big firms contrast those of smaller businesses, or "Main Street".

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APPENDIX B

IMPORTANT INVESTOR RELATIONS COMMUNICATIONS TOOLS
2

Annual General Meetings
A mandatory yearly meeting of shareholders that allows stakeholders to stay
informed and involved with company decisions and workings. This is the single
event whereby shareholders are able to gather and ask the board of directors
questions pertaining to corporate health and strategy. Proper notice must be given
to shareholders with regards to meeting times and agenda.
Annual Report
Audited document required by the SEC and sent to a public company’s or mutual
fund’s shareholders at the end of each fiscal year, reporting the financial results
for the year (including the balance sheet, income statement, cash flow statement
and description of company operations) and commenting on the outlook for the
future. The term sometimes refers to the glossy, colorful brochure and sometimes
to Form 10-K, which is sent along with the brochure and contains more detailed
financial information.
Company News Releases
This includes transcripts of speeches that key executives may make at industry
conferences, press releases about company decisions, and new product
announcements. There is often an option to obtain video or audio clips of press
conferences of industry conference calls via company Web sites.
Conference Calls
An event during which investors can call in to a special phone number and hear
company management report its quarterly results as well as forward, or projected,
earnings. While the average investor can only listen to the call, the reporting
company will often field questions from analysts. Most publicly-held companies
hold four conference calls per year. Many companies offer audiocasts of their
calls over the Internet. Also known as "earnings conference call", "analyst call"
and "earnings call".
Corporate Profile
A document that summarizes and focuses, in professional form, most of the
essential data that analysts and investors must search out before they can judge a
company. It is more succinct and objective than the annual report.
Earnings Press Release
A press release that discusses the financial results of the company for the recently
completed quarter and may provide comments from management. Press releases
often list valuable contact information that can assist in research, such as the
company's web address.

2
Sources: “Using investor relations: the companies you invest in must answer your questions,” Scott, 2004;
www.investorwords.com; New Dimensions in Investor Relations, Marcus and Wallace, 1997;
www.investopedia.com.

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Fact Sheet
A one-page, double-sided verbal snapshot of a company that states the investment
case and lays out statistics vital to the investment decision making process.
Proxy Statements
These documents authorize a shareholder’s vote on the election of company
directors or the approval of mergers and acquisitions.
Quarterly Report
Unaudited document required by the SEC for all U.S. public companies, reporting
the financial results for the quarter and noting any significant changes or events in
the quarter. Quarterly reports contain financial statements, a discussion from the
management, and a list of “material events” that have occurred with the company
(such as a stock split or acquisition). Also called Form 10-Q.
SEC Filings
The Securities and Exchange Commission requires publicly traded companies to
file certain reports regularly. These include the 10-Q Form, the 10-K Form, and
the 8-K Form.
Shareholder Letter
A portion of a company's annual report in which the management discusses the
company's activities during the year and helps to explain the financials and other
contents of the rest of the report.

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APPENDIX C

SHAREHOLDER LETTER
3

The following is a verbatim shareholder letter from the 2005 Annual Report filed by
Martha Stewart Living Omnimedia:

Dear Fellow Shareholders,

Two thousand and five, our first full year leading Martha Stewart Living Omnimedia,
was significant on so many levels. It saw the affirmation of our brand’s enduring power;
an extraordinary drive from our creative and management teams; and a rebound into our
business. Our revenue increased 12 percent to $209 million, and we closed the year with
a profitable fourth quarter, showing meaningful improvement and outpacing our
expectations across every segment of the company. Going into 2006, we are confident
that the turnaround is real and that the avenues for growth are vast.

We achieved each of the five goals we set to jump-start our engines and position the
company for long-term growth: bring advertisers back, launch the daily television show,
strengthen the management team through strategic hires, put our libraries to work, and
make our “how-to” content available on new platforms and in new formats. With

3
Martha Stewart Living Omnimedia. 2005 Annual Report. http://ccbn.mobular.net/ccbn/7/1510/1659/.

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Martha’s return to the company in March, we were able to meet these objectives and gain
increasing momentum throughout the year.

Along the way, we developed new respect for the company’s underlying premise – that
“home” and all it represents is a never-ending source of business opportunity. By
delivering “why-to” inspiration along with “how-to” information, Martha Stewart Living
Omnimedia has been able to bring a little more quality, a little more creativity, and a little
more meaning to its customers’ lives. They have responded with a loyalty to our brand,
and to Martha herself, that is gratifying to each and every one of us at the company.

Our flagship publication, Martha Stewart Living, has always been a bellwether for the
company’s fortune, so restoring advertiser support was a key priority for 2005. Thanks to
a reenergized sales effort and a continuing commitment to editorial quality, ad pages
increased 133 percent in the fourth quarter and 45 percent for the full-year period. Those
stellar results from our Publishing segment earned the industry’s respect along with ours,
with Adweek naming them “Executive Team of the Year.” Living’s momentum has
continued into 2006: First quarter pages are up 70 percent year over year. Consumer
indicators are equally robust, with newsstand sales up 10 percent for the second half of
2005 and direct mail response rates pacing at record highs.

In our Broadcasting segment, the launch of Martha’s new syndicated show generated
important visibility, delivered solid ratings, and garnered critical praise. We launched
Martha Stewart Living Radio, a first-of-its-kind lifestyle channel, on SIRIUS Satellite
Radio, providing original programming 24 hours-a-day, 7 days-a-week. The
Merchandising group successfully launched two new furniture programs: Everyday
Rooms at Kmart and Opal Point, a fourth collection for Bernhardt.

With our core business stable and strong, our focus for 2006 is on maintaining our
momentum and driving solid, sustainable growth. A vital element of our task is
upholding the standards that Martha herself established—the quality and selectivity that
earns consumers’ trust, day in and day out, in every format and in every distribution
outlet. With that in mind, we sifted through many business opportunities and proposals
this past year to determine how we go about capitalizing on our formidable brand.

Today, we are very clear about where we have equity. Virtually anything having to do
with the home—design, decorating, organizing, home goods, home solutions, cooking,
entertaining, and crafts—is ours to own. Massive opportunity exists for the Martha
Stewart brand in these areas, and we will stay focused on our areas of strength.

As we decide how to allocate our assets—both our unmatched human resources and our
still healthy cash position—knowing where to focus is only step one. Any prospective
opportunity has to meet five other criteria:

 Is it on brand?
 Will consumers embrace it?

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 Does it fill a market need?
 Do we have the expertise to produce a better product?
 Is the potential return great enough to expend the resources?

As Martha says, “Good partners make good business.” By applying those criteria
rigorously in 2005, we were able to identify and pursue the right strategic partnerships to
carry us forward. Each key agreement we struck forms a platform for significant future
growth.

Walk through one of our Martha Stewart-designed houses by KB Home and you will feel
the difference we bring to this partnership. Because we are actively and deeply involved
in every design element, from floor plans to decorative moldings, we are able to bring the
Martha Stewart sensibility to the home-building arena.

The strong demand for these houses validates what we already knew: People desire the
unique combination of quality, style, taste, and value that the brand represents. Based on
the success of our first collaboration with KB Home—650 houses near Raleigh, North
Carolina—we have agreed to help design Martha Stewart homes in other communities
across the country, including Atlanta, Charlotte, Daytona Beach, Houston, and Las Vegas.

But branded homes are just the beginning. We will also be creating a line of home
products or design options in a range of categories—floor coverings, lighting fixtures,
kitchen cabinets, hardware, window treatments, moldings, and closet organizers—a
whole new arena of products for us to develop and market.

Our 2005 agreement with EK Success and GTCR Golder Rauner to design and distribute
Martha Stewart Crafts products is also right in line with our capabilities. Our first crafts
line will address the fast-growing $3 billion scrapbooking market with a wide range of
tools and paper-based craft products. Despite the growing popularity of crafting among
all demographic groups, and the sale of craft products in thousands of retail outlets, there
is still no national brand. This is clearly an opportunity for MSLO and we plan to
capitalize on our expertise and brand equity in the category. By the end of this year, we
will begin offering digital scrapbooking templates on our website. In early 2007, we will
add tools and applications that allow users to manage their scrapbooking projects on our
site.

The Internet will be a key focus this year. Our core demographic is among the fastest-
growing Internet user groups, and the growth drivers most-often cited—personalization,
community, creative expression, and video—are tailor-made for our assets and
capabilities. Add the explosion in online advertising to these compelling trends and it
becomes crystal clear that this is a platform we must master. We’re already moving more
of our content onto our website, www.marthastewart.com, improving our search and
navigation functions, and highlighting the gateways to commercial sites where our
products are sold.

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We are also expanding our print platform with Blueprint, a new magazine aimed at a
younger customer with a busy, multifaceted work and home life. Expanding on Martha
Stewart Living’s core areas of expertise, Blueprint will also cover fashion, beauty, health,
fitness, travel, technology, and culture. The first test issue will hit newsstands in May,
with an initial rate base of 250,000.

As we pursue these initiatives, we are very grateful for the continuing support of our
fellow directors, each of whom brings special expertise and experience to a collegial and
constructive working Board. In June 2005, Thomas C. Siekman became lead director. Jill
Greenthal, a Senior Managing Director at The Blackstone Group, joined the Board in
February, bringing 20 years of experience as a financial advisor to media companies of
all kinds.

All in all, 2005 was a year of new beginnings and great promise. Our goals for 2006 are
ambitious, as they should be, but also attainable. We will remain focused on creating
value, this year and in the long term. We will maximize the near-term benefits of
advertising growth by reinvesting, where appropriate, to support future revenue drivers,
such as the Internet and our KB Home products and our distinctive and timeless
content—wherever, whenever, and however our customers want it—the full promise of
this unique company will be met. You, our shareholders, deserve nothing less.

Thank you for your continued support.

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APPENDIX D

SARBANES-OXLEY PROVISIONS

Sarbanes-Oxley has numerous provisions. Following is a list of Sarbanes-Oxley
provisions that apply directly to the practice of investor relations:
1. Enhanced financial disclosures and accuracy of financial reports.
All financial statements filed with the SEC must reflect all material correcting
adjustments under generally accepted accounting principles (GAAP) (see
glossary) and SEC rules that have been identified by the auditor.
2. Real-time disclosures.
Companies must disclose information concerning material changes to their
operation and/or financial condition on a quick and constant basis. This means
that investor relations professionals must be in daily contact with accounting,
legal, audit and public relations departments to look for items that might require a
rapid disclosure, which could be accomplished by an investor conference call,
posting information online, and/or sending out a press release.
3. Off-balance-sheet transactions.
All annual and quarterly reports filed with the SEC must disclose all material off-
balance-sheet transactions, obligations, arrangements and other relationships of
the company with unrelated entities or other persons that may have a material
present or future effect on the company’s financial condition.
4. Pro forma financial disclosures.
Companies are required to reconcile any published pro forma data to the financial
condition and results of operation calculated according to GAAP.

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5. Management assessment of internal controls.
Companies must include their annual report in an internal control report. The
internal control report must contain a statement by company management that it is
responsible for creating and maintaining adequate internal controls and
procedures for financial reporting, and an assessment of the effectiveness of those
controls and procedures as of the end of the company’s most recent fiscal year.
6. Corporate responsibility for financial reports and officer certification.
Chief Executive Officers (CEOs) and Chief Financial Officers (CFOs) of public
companies must certify in all annual and quarterly reports that they have reviewed
the report and that the report contains no untrue or misleading statements. In
addition, they must also certify that they are responsible for and have reviewed
internal controls, and that there are no deficiencies in internal controls.
7. Forfeiture of certain bonuses and profits.
Any CEO or CFO preparing to make an accounting restatement because of
misconduct in compliance with SEC financial reporting regulations must forfeit
any bonuses or other incentive- or equity-based compensation received during the
twelve-month period following the publication of the financials being restated.
8. Insider transactions.
Directors, officers and any entity owning more than 10 percent of a company’s
outstanding stock must disclose any transaction within two business days
following the transaction. It is illegal for any insider to purchase of sell any
security of a company during a “blackout” period (see glossary).

85
9. Securities litigation and statute of limitations.
SOX modifies previous statute of limitation for securities litigation of one year
after discovery of the alleged violation or three years after the violation, to the
earlier of two years after discovery or five years after the alleged violation.
10. No bankruptcy charge.
Federal bankruptcy law is amended to immediately prevent the discharge of debts
under any claim relations to a violation of state or federal securities laws, or any
securities fraud or manipulation (Cole 2004, 47-50).

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APPENDIX E

SURVEY RESULTS

Investor Relations Practitioners

Following are the verbatim responses to questions asked of investor relations
practitioners:

Question Three: What do you think investor relations practitioners and public
relations practitioners need to do in order to communicate better?
 Key is to understand completely: the company you work for; its strategies;
your competitors; your industry; and the economic environment and its
impacts on your company and industry.
 Understand the business.
 The best financial information possible, and solid justifications for
company actions.
 Collaborate closely on all external messages regarding the company. Its
[sic] easy for the media and the investment community to misconstrue
[sic] the intended meaning. Therefore the messages must be constructed
with great care and clarity. If the company's Media dept. does not
understand the financial impact of an event affecting one of our businesses
and addresses the media, incoherent stories and rumors may circulate
causing the "street" to doubt the company's performance and legitimacy,
which ultimately affects the stock price.
 Investor relations professionals primarily engage with the institutional
investment community of research analysts and focus on explaining the

87
drivers that impact quarterly financial performance. "Better
communications" is most likely to measured [sic] in this context by how
clearly and comprehensively an investor relations professional explains
complicated relationships that drive financial performance. In contrast, a
public relations professional's communication effectiveness is limited by
the set of facts available to be discussed and the clarity with which such
facts are described to the media.
 Both need to have a better understanding of their immediate audience and
know how to address their needs. This is rare in the industry.
Question Four: What (if any) is the difference between investor relations and
financial communications?
 Investor relations (at least at my company) is focused on equity analyst
and equity investors. And the communication of our financial performance
and long-term strategies. My understanding of public relations (again in
my experience) is of a function focused on media. With the media
audience requiring a different level and type of communication related to
financial matters and encompassing much broader discussion beyond
financial matters.
 Investor relations deals with large institutional investors whereas I assume
public relations deals more with the media and the general public
 Two completely different audiences.
 No difference that I can see.

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 Investor relations professionals present the value of the company to
shareholders, both institutional and retail. The parameters of the investor
relations universe are financial metrics that represent shareholder value. In
contrast, public relations professional are involved with a broad array of
issues that impact a company's image to the public at large - crisis
management, branding and other macro themes that a company wants the
public to be aware of fall under the jurisdiction of public relations.
 IR folks speak directly to institutional or individuals while financial public
relations is targeted indirectly to that audience, but communicated via the
media.
Question Six: Do you work in-house or at an agency? Based on your
experience, what are the advantages/disadvantages of practicing IR in that
environment?
 In-house environment. The key advantage to being in-house is always
being in the "flow" of your company. If you're agency based you will miss
out on informal communications when you are not on site.
 In house. Direct contact with management.
 In house.
 IR should remain an in-house function. The IR specialist needs to be in
touch with the company in total, the CEO, CFO and the financial
community.

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 Agency. Advantages are the resources that you have - can tap into tools
that are typically more expensive an [sic] amortized among several clients.
Also can tap into knowledge of other IR professionals easily.
Public Relations Practitioners

Following are the verbatim responses to questions asked of public relations
practitioners:

Question Six: What do you think investor relations practitioners and public
relations practitioners need to do in order to communicate better?
 Shared understanding of the role and synergies between PR and IR.
Integrated program planning to amplify IR activities through other
communications platforms.
 Syncronize [sic] messages and share data points to support them. Often
times PR doesn't know the business aspects and financials supporting the
messages and initiatives and IR doesn't fully unerstand [sic] the initiatives.
 Mutual respect is sometimes lacking. Investor relations people tend to
consider themselves superior!
 I think that PR practitioners need to have an understanding/training in
investor relations and vice versa. I think they should work together
seamlessly [sic].
 To be honest, I'm not even sure what investor relations practitioners do!
Maybe they should start by getting the word out on all the important
functions they serve...

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 Although they are different, both fields need to work together for the
overall benefit of the company. Investor relations targets a different
audience but is just as important as public realtions [sic] is in dealing with
the general public.
 Open communication.
Students

Following are the verbatim responses to questions asked of students:

Question One: What comes to your mind when you think of investor relations?
 PR professionals communicating with shareholders of corporations
 Complete and total mind numbing boredom... and Gordon Gekko
 Numbers
 Relationships with shareholders as quantified by a company's stock
performance
 Money
 Complicated and a lot of money
 Being the communication between a company and its
investors/financial stakeholders
 Quarterly reports, finance, regulations
 MBA
 Well-paid positions with companies like Vanguard or T. Rowe
Price; keeping investors happy; writing lots of literature designed
to get people to put more money into IRAs or stock buys
 Wall Street and the stock exchange

91
 No clue, not a money person
 Stock prices, financial reports, annual reports, communicating with
analysts
 Portfolios, annual reports, keeping the shareholders informed
 Working on increasing communication between investors and the
companies they are investing in or maybe between two different
companies
 Math, calculus, economics and Wall Street. communication with
investors and analysts
 Maintaining good relationship with money provider
 Shareholders and communications between a company and its
appropriate stakeholders
 Money
 The position within a company that manages the relationship
between the company and its investors and financial analysts. The
IR practitioner translates and communicates the financial info
about the company and interprets what it means for the future of
the company
 Finance with personality
 Hard hard work with lots of numbers. Also keeping shareholders
abreast of the information dealing with their investment.
Question Five: What (if any) is the difference between investor relations and
financial public relations?

92
This was the second of two open-ended questions. 21 of 22 respondents answered
this question, and their verbatim answers are as follows:
 Finance PR is more like corporate PR, and investor relations only
deal with shareholders
 Financial is only for financial institutions but anyone can have an
investor relation team
 Numbers dealing directly with stockholders
 Financial public relations may be more broad based, referring to
relations with the consumer as well as with investors
 I'm not sure
 Not sure. I've only heard references to investor relations
 I would say they are the same thing
 Investor relations are more likely to care about investors
 I think they're about the same
 I don't know
 There isn't a difference
 Don't think there is any
 I perceive the difference is that investor relations deals more
directly with the shareholders of a particular company, while
financial public relations is more traditional PR but for a financial
institution
 I didn't think there was a difference. I always assumed they fell
under the same category

93
 I honestly have no idea. IR goes directly with investors, where as
financial is more broadly speaking of the Street, analysts AND
investors, maybe?
 Actually, I couldn't tell apart
 Don't think there's much of a difference
 Don't know enough about the two, but they deal with completely
different things
 You see my understanding of IR above. financial PR is public
relations for financial companies (i.e. banks, financial institutions,
investment / capital companies, brokers, etc)
 None
 Not sure.

Abstract (if available)

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Asset Metadata

Creator Wheeler, Samantha D. (author)

Core Title The convergence of investor relations and public relations: fitting investor relations into the overall corporate communications strategy

School Annenberg School for Communication

Degree Master of Arts

Degree Program Strategic Public Relations

Publication Date 04/21/2007

Defense Date 03/28/2007

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag investor relations,OAI-PMH Harvest,Public Relations

Language English

Advisor Floto, Jennifer D. (committee chair), Riley, Patricia (committee member), Swerling, Jerry (committee member)

Creator Email swheeler@usc.edu

Permanent Link (DOI) https://doi.org/10.25549/usctheses-m434

Unique identifier UC1472373

Identifier etd-Wheeler-20070421 (filename),usctheses-m40 (legacy collection record id),usctheses-c127-493595 (legacy record id),usctheses-m434 (legacy record id)

Legacy Identifier etd-Wheeler-20070421.pdf

Dmrecord 493595

Document Type Thesis

Rights Wheeler, Samantha D.

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Repository Name Libraries, University of Southern California

Repository Location Los Angeles, California

Repository Email cisadmin@lib.usc.edu