Investor Relations in the Transition Economies of Central and Eastern Europe

Abstract

This study concerns the emergence of investor relations (IR) practices in the countries of Central and Eastern Europe (CEE). The study employs a model (Marston, 2008) that predicts the emergence of IR once certain prior conditions exist (i.e., companies, stock markets, and investors). Research questions are derived from the model and investigated via a postal questionnaire and interviews. Adoption of IR has emerged rapidly in response to market-side disclosure demands that did not exist in the days of planned economy. Perceptions about IR are largely positive. Companies are using the full range of IR tools and report substantial levels of IR activity. Although respondents are unsure about the market outcomes of IR, they perceive that benefits outweigh the costs. The results show the convergence of the IR function to a Westernized model rather than the development of a holistic model specific to the area.

Keywords: investor relations (IR), Central and Eastern Europe (CEE), transparency, disclosure

JEL Classification: M40