The accepted definition of a “best practice” is a method, procedure, technique or professional service that is generally accepted or prescribed as being the most superior or correct for the industry it serves. Conformance to best practices will set you up to be able to compete effectively in your market sector, and this applies to investor relations as equally as it does in any other field.
In some instances, best practice standards are prescribed by a regulatory body or agency. If not, they may vary greatly in your particular industry. However, there are some basic best practices for investor relations that should be applied by every company:
This implies honesty in all communications and reporting corporate news, whether good or bad. You run the risk of losing investors’ trust and investment if they gain the impression that you are hiding something. Full disclosure is always the best policy, and, by employing the right strategy, you can generate a positive response from bad news. If bad news is broadcast by someone else first, the result could be catastrophic for your company.
Remain Visible and Transparent
Inevitably, bad news may garner negative feedback and reaction. Investors will often want to speak to senior management to get clarification on the issue. It is vital that you communicate with investors to reassure them that you’re in control of the situation. Be proactive and communicate with your shareholders to tell them what steps you’re taking to contain or reverse any damage.
Invest the time to thoroughly prepare and review your messages and other communications before sending them out to investors. This applies whether you’re preparing a press release or posting a message on social media. Anticipate potential concerns or questions that may arise and draft calculated and honest responses that reassure your shareholders.
These three best practices form a basic framework for an investor relations strategy, but they are by no means complete. Because of the risk you run of being unable to handle bad news adequately and suffering subsequent investor fallout, it is best to call in the professionals. QualityStocks employs a team of professionals who will conduct an audit on your preparedness to deal with a negative event. Our team will work with your senior management to formulate an appropriate strategy and recommend IR best practices for your company.