Despite the importance of investor relations to investors, corporate managers and regulators, theoretical and professional literature on the subject is sparse. The authors surveyed both corporations’ own investor relations specialists and sell-side security analysts in regard to their perceptions of the goals of investor relations programs, the degree to which those goals are accomplished, the programs’ activity levels and their effects on stock prices.

Both groups agreed that corporate investor relations programs should furnish timely and reliable information to the capital markets, and both gave relatively high marks on the accomplishment of this objective. Unlike investor relations specialists, however, analysts did not agree that stock price performance should be one of the primary goals of investor relations.

Both groups rated investor relations programs as “moderately active” in their cultivation of analysts. The groups also agreed that investor relations programs have a favorable impact on market prices. Nevertheless, the overwhelming majority of investor relations specialists believed that the capital market undervalued the common stocks of their corporations.

Analysts generally felt the information provided enabled them to understand the nature of the corporations and their operating and financial risks. The investor relations specialists felt, in turn, that analysts were doing a fairly good job of interpreting the information they supplied. The analysts were less convinced, however, that this information enabled them to estimate future earnings and investment value — the most crucial elements of the stock valuation process.