The Theory and Practice of Investor Relations: A Global Perspective

75 Pages Posted: 8 Apr 2015 Last revised: 1 Aug 2019

See all articles by George Andrew Karolyi

George Andrew Karolyi

Cornell University - Samuel Curtis Johnson Graduate School of Management

Dawoon Kim

Cornell University

Rose C. Liao

Rutgers University, Newark, School of Business-Newark, Department of Finance & Economics

Date Written: June 19, 2017

Abstract

Using proprietary survey data of investor relations (IR) officers from 59 countries, we uncover new stylized facts on a wide variety of IR functions, such as the firm’s interactions with brokers and investors, the formulation of its disclosure policies, and its global outreach efforts. We find that IR activities vary widely across firms, industries, and countries. They have become increasingly important as reflected by the more frequent involvement of IR officers with senior executives on a day-to-day basis. We also find that large and complex firms receiving greater media attention engage more in IR activities. In addition, firms domiciled in countries with weaker legal protections for investors and poorer disclosure standards, those cross-listed in the stock markets that are outperforming, and those with high global media visibility invest in greater global outreach efforts with IR activities. Firms’ IR efforts to investors world-wide are associated with higher Tobin’s q valuation ratios. We interpret our findings in the context of theories and existing evidence on the role of asymmetric information and governance problems in global markets.

Keywords: Investor relations, disclosure, institutional investors, market valuation

JEL Classification: G14, G15, G34

Suggested Citation

Karolyi, George Andrew and Kim, Dawoon and Liao, Rose C., The Theory and Practice of Investor Relations: A Global Perspective (June 19, 2017). Available at SSRN: https://ssrn.com/abstract=2591079 or http://dx.doi.org/10.2139/ssrn.2591079

George Andrew Karolyi (Contact Author)

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

Ithaca, NY 14853
United States

Dawoon Kim

Cornell University ( email )

Ithaca, NY 14853
United States

Rose C. Liao

Rutgers University, Newark, School of Business-Newark, Department of Finance & Economics ( email )

1 Washington Park
Newark, NJ 07102
United States

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