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IR Within the Organisation

In: Investor Relations and ESG Reporting in a Regulatory Perspective

Author

Listed:
  • Poul Lykkesfeldt
  • Laurits Louis Kjaergaard

Abstract

In this chapter, we explore that if a company via good IR can remove just 1 percentage point of risk premium in a company’s share price valued at 1 billion euro, this equals a rate of return on IR of 10 million euro. Therefore, the investors, thereby the board of directors, should have a clear interest in the strategic decisions and KPIs for the IRO. Good corporate governance involves the principal agency theory, in that the senior management (“the agent”) and board of directors (“the principal”) have asymmetric information; both functions act to maximise their utility, their goals are not always aligned. The agents tend to be more opportunistic. Therefore, the board of directors also has clear benefits of utilising the IR function. However, a short-term CEO may be less transparent towards the board of directors, as they are his employers. Having a stable connection between the IRO and shareholders, better allows strategic and shareholder transparency, which satisfies current shareholders to a greater extent.

Suggested Citation

  • Poul Lykkesfeldt & Laurits Louis Kjaergaard, 2022. "IR Within the Organisation," Springer Books, in: Investor Relations and ESG Reporting in a Regulatory Perspective, chapter 0, pages 153-160, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-05800-4_19
    DOI: 10.1007/978-3-031-05800-4_19
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