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Strategic investor relations Strategic

investor
management: insights on planning relations
management
and evaluation practices among
German Prime
Standard corporations Received 5 June 2020
Revised 25 September 2020
20 November 2020
Christian Pieter Hoffmann and Sandra Binder-Tietz Accepted 23 November 2020
Faculty of Social Sciences and Philosophy,
Institute of Communication and Media Science, University of Leipzig,
Leipzig, Germany

Abstract
Purpose – While several extant studies have discussed the strategic importance of investor relations (IR) for
listed corporations, few have tried to apply findings from strategic communication research to IR. Therefore,
little is known about the planning and evaluation of IR programs, with even less data available on IR’s
involvement in top management decision-making. The purpose of this paper is to examine research on
planning and evaluation practices in German Prime Standard corporations’ IR departments.
Design/methodology/approach – The method entailed a survey of 51 heads of IR departments from the
largest corporations listed on the Frankfurt Stock Exchange concerning the topic of measurement and
evaluation.
Findings – The findings highlight an intermediate stage in the professionalization of the still-emergent IR
function. While IR has been established as an independent function with some consideration in strategic
leadership, strategic management of the function is still evolving. This study shows that while some form of
planning is the norm, IR departments at smaller companies tend to focus more on departmental objectives than
on deriving objectives from the corporate strategy. Also, systematic evaluation remains lacking in many
smaller companies’ IR departments. As a result, IR managers from smaller companies are consulted less
frequently during top management meetings on corporate strategy.
Research limitations/implications – This study is based on data collected only from German Prime
Standard corporations. While satisfactory in the context of quantitative IR studies, the response rate from the
reported survey was only 32%. Furthermore, the average level of strategic IR management among German
listed companies actually may be somewhat lower than reported in this paper, as large listed companies are
somewhat overrepresented in the sample.
Originality/value – This study addresses an apparent research gap, i.e. to date, little is known about the
strategic management of the IR function, especially in a non-US context. This analysis shows that theories and
frameworks from strategic communication management can be applied to the IR function.
Keywords Measurement, Investor relations, Public relations, Communication management, Strategic
communication
Paper type Research paper

Introduction
Due to large ownership concentration and a tradition of debt financing, foreign investment’s
role in the German stock market was limited for much of the second half of the 20th century.
Then, successive deregulation waves in the 1980 and 1990s raised German stocks’
attractiveness among international investors and increased German corporations’ reliance
on equity financing. However, most German corporations turned out to be ill-prepared for
Anglo-Saxon investors’ investment styles and engagement practices. Although previously
unheard of, several activist investors, buying up minority stakes in German industrial Journal of Communication
Management
powerhouses such as ThyssenKrupp and Volkswagen, vocally and publicly demanded © Emerald Publishing Limited
1363-254X
changes in corporate governance and strategy (cf. Engert, 2019) – a rude awakening to many DOI 10.1108/JCOM-06-2020-0047
JCOM board members that shined a light on the strategic importance of high-quality investor
relations (IR).
IR has been a distinct corporate function for only about 50 years in the USA and for 30
years in Europe; therefore, IR still can be viewed as a young, emergent function – continually
questioning and aligning its responsibilities and tasks. While the state of IR practice differs
quite significantly among countries, with the professionalization of IR frequently mirroring
local capital markets’ maturity, extant research has evolved to provide a more nuanced
understanding of the purpose and contribution of IR (Hoffmann, 2019).
The National Investor Relations Institute (NIRI) has defined IR as a “strategic
management responsibility that integrates finance, communication, marketing, and
securities law compliance to enable the most effective two-way communication between a
company, the financial community, and other constituencies, which ultimately contributes to
a company’s securities achieving fair valuation” (NIRI Board of Directors, 2003). The German
Investor Relations Association was established in 1994 and has grown to represent 300
members, predominantly from listed corporations. It defines IR as “the strategic management
task of establishing and maintaining relationships between the company and existing and
potential equity and debt investors, as well as capital market intermediaries” (DIRK, 2016).
As these definitions suggest, IR is a strategic management responsibility: by reducing
information asymmetries between corporate management and owners, IR facilitates good
corporate governance practices. The IR function enables dialogue between management and
key financial publics, helps inform strategic decision-making and increases organizational
resilience by limiting disruptions to strategy execution (Rao and Sivakumar, 1999; Laskin,
2009; Hoffmann and Aeschlimann, 2017). However, while current research provides
important insights into the contributions from IR, little is known about the strategic
management of this important communications function.
On one hand, extant research in the field of communication management that elucidates
the planning, organization, coordination and evaluation of communications tends to focus on
the public relations or corporate communications function (Hallahan et al., 2007; Zerfass and
Viertmann, 2017). Few studies have applied models or frameworks developed in the context
of communication management to the neighboring communications function of IR (Ragas
and Laskin, 2014; Ragas et al., 2014). On the other hand, studies on IR focus on either
operational aspects, such as communication instruments’ design, or on capital markets’
reception of IR activities (for a comprehensive literature review, see Hoffmann et al., 2018). As
a result, little is known about the planning, strategic objectives and systematic evaluation of
IR. This creates a risk of overlooking the need to demonstrate IR’s contribution to corporate
success diligently. As Zerfass and Volk (2018, p. 409) point out, establishing how
communications contribute to corporate success is necessary “to be valued and treated as
‘a creator of value’ by the top management.”
In this paper, we built on previous research on evaluation practices in US IR departments
(Ragas and Laskin, 2014; Ragas et al., 2014). To date, evidence is lacking on IR planning and
evaluation beyond the US context. Germany provides a rich context in which to analyze
strategic IR management because the German capital market, while not as large and
established as its US counterpart, today ranks among the largest and most professional
markets globally (PwC, 2019). IR in Germany has experienced rapid development and
professionalization (DIRK, 2016) and ranks among the most advanced among developed
economies in terms of disclosure quality (Friedman, 2019).
In this paper, we present data on planning, objectives and evaluation practices in IR within
German Prime Standard corporations. We also analyze how the IR function is embedded
within the organization, focusing on its personnel’s participation in top management
meetings as an indicator of esteem. Our analysis was based on a survey of 51 heads of IR
departments from the largest corporations listed on the Frankfurt Stock Exchange.
We applied insights from strategic communication research to the management of IR to Strategic
answer the following research questions: investor
RQ1. How is the IR function embedded within the organization? relations
RQ2. What is the state of strategic planning in IR? management
RQ3. What strategic objectives does the IR function pursue?
RQ4. What are common evaluation practices in IR?

Literature review
Contributions of investor relations to corporate success
As Zerfass and Volk (2018) noted, many communication departments struggle to explain or
demonstrate their contribution to corporate success. The authors proposed a framework that
identified four core contributions from communication departments: (1) communicating the
corporate strategy and securing support from key stakeholders, (2) supporting day-to-day
operations of other organizational functions through professional communication,
(3) building internal capabilities and (4) advising and coaching corporate leadership.
Much of this can be applied to the IR function – with one notable distinction:
communicating with investors is only partly a voluntary enterprise. Investors have a right to
regular updates on their investments’ performance (i.e. corporate reporting). Along with
investor–executive interactions during annual shareholders’ meetings, corporations also are
required to notify shareholders in the event of price-sensitive business developments (i.e.
ad hoc publicity). In short, IR is rooted in a reporting and disclosure function derived from
corporate governance requirements (cf. Fama, 1980; Jensen and Meckling, 1976).
As a result, the IR function is tasked with providing financial and non-financial data that
capital market participants require to create an adequate, and ideally affirmative,
understanding of the corporation’s assets, strategy and development (Hoffmann and
Fieseler, 2012). Therefore, several IR studies have examined the quantity and quality of
corporate disclosure (Bushee and Noe, 2000; Bushee et al., 2003; Hutton et al., 2003). Also,
event studies have examined obligatory announcements’ quality and their effects on share
price development (cf. Ferretti et al., 2015).
However, over the past few decades, IR has evolved beyond fulfilling governance
requirements into a strategic communication function. It is tasked with ensuring a listed
company’s visibility among the financial community (Francis et al., 1997; Grullon et al., 2004;
Lehavy and Sloan, 2005), as well as enhancing investors’ perceptions and opinions (Clarke
and Murray, 2000; Mazzola et al., 2006). The IR function strives to ensure a positive corporate
image or reputation among capital market participants (Cutlip et al., 1999; Hong and Ki, 2007;
Laskin, 2009). Kuperman (2000) and Laskin (2006) argued that fostering relationships with
investors through two-way symmetrical communication provides tangible benefits for
publicly owned corporations.
Rao and Sivakumar (1999) described IR as a boundary-spanning function that ensures
support for management’s strategic initiatives among financial audiences, thereby
generating strategic leeway for the corporation. Similarly, Hoffmann et al. (2016) argued
that fostering a positive capital market reputation protects corporations from strategic
interventions by shareholders. Several studies in the field of finance even have argued that
good IR is of monetary value to listed corporations, as it fosters visibility and liquidity
(Bushee and Miller, 2012; Kirk and Vincent, 2014) while also reducing information asymmetry
and risk (Farragher et al., 1994; Chang et al., 2014).
Despite this evidence on the important role of IR, there is a notable lack of communication
management research focusing on the IR function. While the literature on IR provides
JCOM insights into the function’s contributions to corporate success, demonstrating these
contributions requires professional management practices, including strategic planning
and evaluation (Zerfass and Volk, 2018; Vercic and Zerfass, 2016).

Investor relations management

According to Hallahan et al. (2007, p. 10), “purposeful influence is the fundamental goal of
communications by organizations.” Therefore, organizations need to apply management
practices to set up, plan, budget, monitor, adjust and evaluate their communication activities
systematically. Accordingly, Sandhu (2009, p. 73) describes the establishment of strategic
communication as a “managerialization of communication as a strategic function.” In other
words, strategic management models increasingly are applied to communications, most
significantly in terms of strategic planning and evaluation.
The application of management practices to communications is viewed as a key element of
strategic communication management, as they enhance corporate leaders’ understanding of
and esteem for communications (Zerfass and Viertmann, 2017). Grunig (2006) stresses that a
strategic management role can be ascribed to communications only if it can explain how it
contributes value to the organization (cf. Argenti, 2016). Planning and evaluation of
communications programs serve exactly this purpose and, therefore, can be viewed as a
prerequisite for communications professionals to be taken seriously as experts advising
organizational executives on their decision-making (Bronn 2014).
Therefore, the successful institutionalization of communication management within
organizations can be gauged by the “extent to which strategic communication
recommendations are taken seriously by senior management” and “the extent to which the
recommendations and reputational considerations are factored into strategic decision
making and planning in the organization” (Tench et al., 2009, p. 155). To capture this
institutionalization of strategic management, the European Communication Monitor,
Europe’s largest periodic survey of communications professionals, analyzes how
frequently respondents are involved in their organizations’ strategic planning and
decision-making (“executive influence”).
Again and again, studies have shown that while communications professionals increasingly
embrace management practices, one key element of strategic communication tends to lag behind:
the systematic evaluation of communications programs based on objectives derived from
strategic planning (Zerfass and Viertmann, 2017; Zerfass et al., 2017a, b). Based on a large-scale
survey in the Asia-Pacific region, Macnamara and Zerfass (2017) diagnosed an “evaluation
stasis.” Grunig (2006) noted that research on communications evaluation only started in the early
to mid-1980s; therefore, it is not surprising that evaluation models and frameworks are only now
slowly being adopted in practice.
To date, little is known about planning, objectives or evaluation in IR. Laskin (2011)
presented four key areas in which IR may contribute value to an organization’s bottom line:
fair share prices, improved stock liquidity, enhanced analyst coverage and building and
maintaining investor relationships. This theoretical framework was tested based on a Delphi
study by NIRI and the Financial Communications Section of the Public Relations Society of
America (PRSA), finding support among practitioners for the first three propositions, as
evaluating relationship quality remains challenging in practice.
Survey results presented by Ragas and Laskin (2014) provide valuable initial insights into
evaluation practices in the USA, indicating that IR officers (IROs) prefer to apply a
combination of quantitative and qualitative metrics to measure their programs’ success.
Notably, practitioners place the greatest value on metrics that are qualitative, nonfinancial
and relationship-oriented. This would suggest that IROs believe that evaluations should
focus on their success in relationship management.
 Despite these initial insights into IR evaluation in the USA, there is still a lack of research Strategic
on the state of communication management within the IR function, particularly strategic investor
planning and systematic evaluation. This study will address this research gap, applying
insights from communication management research to IR based on a survey of IR managers
relations
in the largest corporations listed on the German Stock Exchange. Research suggests that management
professional management practices enhance top management’s esteem for the
communications function (Bronn 2014; Vercic and Zerfass, 2016). Therefore, we also will
examine how the IR function is embedded within the organization, with an emphasis on
participation in top management meetings.

Method
The ensuing analysis is based on a quantitative survey of IR professionals from large listed
companies, with headquarters in Germany. The study’s sample population comprised the
heads of IR from the 160 largest corporations listed on the Frankfurt Stock Exchange. The
companies all are listed under the German Prime Standard in these indices: 30 blue chips from
the Deutsche Aktienindex DAX, 50 from the MDAX (companies that rank immediately below
companies on the DAX), 30 from the TecDAX (the largest companies from Germany’s
technology sector) and 50 from the SDAX (small and medium-size companies). Contact data
on the heads of the IR departments were collected from the respective corporate websites. For
further analysis, the research team collected publicly available data on the companies – such
as revenues, number of employees, share price development and data on IR departments
(e.g. number of employees in the department, communication channels and outlets) – as of the
time the survey was administered.
The questionnaire comprised four main sections (for all survey questions, see the
Appendix):
(1) Embeddedness of IR within the organization;
(2) Strategic planning and objectives in IR;
(3) Evaluation and criteria used to evaluate IR; and
(4) Participants’ demographics.
To examine how the IR function is embedded within the organization, respondents were
asked whether their IR department is an independent department, part of the corporate
communications department, part of the finance department or they could add an open-ended
answer. Another question addressed reporting structure (i.e. whether IR reports directly to
the chief financial officer [CFO], chief executive officer [CEO], both the CEO and CFO, an
executive board member other than the CEO or CFO or no direct reporting line to the
executive board at all). This is of particular interest regarding the measurement approach
applied in the IR function, as CFOs tend to be geared toward quantitative, primarily financial
metrics (Ragas and Laskin, 2014), while IROs hold that relationship-building with the
financial community is one of the most important tasks of IR. Using a five-point Likert-type
scale, from 1 (never) to 5 (always), respondents were asked how often they are invited to
participate in top management meetings dealing with organizational and strategic planning.
The latter measure was derived from the European Communication Monitor study, where it is
described as “executive influence” (Ver
ci
c and Zerfass, 2016).
To address strategic planning objectives, respondents were asked to describe their IR
function’s orientation in terms of communications objectives. The closed-ended choices
ranged from long-term objectives, mid-term objectives, objectives for the respective financial
year and objectives for the respective quarters, to current situational requirements.
JCOM Respondents also were asked about the basis for their function’s communications objectives,
with the following response options provided: overall corporate strategy; the corporation’s
overarching, formal communication strategy; goals set within the IR department; task-
specific objectives; or no guidance from formal strategies or objectives. These questions were
based on current research on communications departments’ contributions to corporations’
strategic success (Volk et al., 2017).
To address the IR function’s substantive strategic objectives, participants were asked to
rate the importance of seven objectives derived from previous literature, five of which are
based on the contribution framework proposed by Zerfass and Volk (2018): reputation
management, relationship management (to secure support from shareholders), share
marketing (a support function for the finance department), fostering internal capabilities
and management support. These contributions were complemented by two objectives
derived from the IR literature: reporting and compliance and the shielding of top management
from shareholder interventions (Rao and Sivakumar, 1999; Laskin, 2009; Hoffmann and
Aeschlimann, 2017). Each objective was measured with 2–4 items that were rated on a five-
point Likert scale from 1 (not important) to 5 (very important).
To analyze the alignment of the planning process with the IR function’s evaluation,
participants were asked whether the evaluation of the IR program refers to one of the
following options: its contribution to the attainment of overall corporate objectives, its
contribution to the attainment of strategic communication objectives, KPIs set within the
department, task-specific KPIs or no existing systematic evaluation of the IR program. Using
a five-point Likert scale, from 1 (not important) to 5 (very important), respondents were asked
to rate – from the perspective of the IR function – the importance of 15 different criteria to
evaluate the success of their activities (presentation(s) to management board, investor
perception studies, individual meetings with top shareholders, financial news media
coverage, responsiveness to investor inquiries, composition of shareholder base, feedback
from the financial community, valuation of company stock relative to peers, sell-side analyst
coverage quality, sell-side analyst coverage quantity, liquidity/trading volume, compliance
with regulatory requirements, change in company stock price, share price volatility, external
recognition/awards and other/open). The selected criteria were based on a review of literature
on IR measurement (Dolphin, 2004; Metzker, 2006; Ragas and Laskin, 2014). Finally,
respondents were asked a series of closed-ended demographic questions.
The sample population was invited via e-mail in June 2018 to fill out an online
questionnaire with no compensation offered. Altogether, 51 Investor Relations Officers
(IROs) completed the questionnaire, resulting in a response rate of 31.87% (n 5 160). The
response rate was particularly high among DAX index representatives. As Figure 1 shows,
the other indices also demonstrated good representation, with a response rate of around 20%.
Of the participants, 52.94% (n 5 27) reported having a decade or less of experience in IR,
37.25% (n 5 19) reported 11–20 years of experience, 7.84% (n 5 4) indicated having more
than 20 years of experience and one respondent did not provide this information. This
relatively high level of experience is because of the fact that the respective heads of IR had
been invited to participate. The sample largely comprised male IR professionals (n 5 42 males
vs n 5 9 females). To date, few women serve in executive positions within German IR
departments (Hollstein et al., 2015).

Results
RQ1 addresses how the IR function is embedded within the organization. This research
question encompasses three elements: organizational structure, reporting lines and the
function’s participation in top management meetings dealing with organizational strategic
planning (“executive influence”).
 Regarding organizational structure, 78.4% of the respondents stated that IR is an Strategic
independent department, while in 3.9% of the cases, it is part of the corporate investor
communications department, and in 15.7% of the surveyed corporations, IR is part of the
finance department. This corresponds with previous research, indicating that IR largely has
relations
established itself as an independent function (Dolphin, 2004; Laskin, 2014; Marston, 1996). management
A chi-square test of independence was performed to examine company size’s effect on this
overall finding, which was insignificant (X2 [1, N 5 79] 5 9.87, p 5 0.361).
Previous studies have shown that IROs commonly report to the CFO rather than the chief
communication officer (CCO), or directly to the CEO (Petersen and Martin, 1996). As shown in
Figure 2, our study confirms this finding: 52.9% of respondents report to the CFO, while
25.5% report to the CEO, and 13.7% do not report directly to a member of the executive board.
Regarding company size, the results show that in larger, as well as smaller, companies, IR
departments tend to report directly to the CFO. Among mid-size companies (MDAX index), IR
departments instead report more frequently to the CEO (55.6%), with only 22.2% reporting to
the CFO and 22.2% not reporting directly to any executive board member. This could be
interpreted as an evolution, with esteem for capital market relations rising as a company
grows from small to mid-size, engendering a more active role for the CEO, but at some point,
further growth necessitates reallocation of IR responsibilities back to the CFO.

Figure 1.
Number and share of
respondents per
index (n 5 51)

Figure 2.
Reporting lines of the
IR department in
percentage (n 5 51)
JCOM Regarding IR officials’ participation during top management meetings dealing with
organizational and strategic planning, 72.2% of the respondents’ stated that they are invited
to these meetings at least occasionally (choices ranged from “sometimes” to “always”). This
result is comparable to the 74.7% participation by corporate communications departments
during senior-level meetings, as documented by the European Communication Monitor
(Zerfass et al., 2017a, b).
In a breakdown by indices, the findings indicate that regular participation by IR officials
during top management meetings is dependent upon company size, as it occurs most
frequently among large DAX companies and least frequently among small TecDAX
companies (Figure 3). This is emphasized by the finding that only larger DAX companies
report that the IR department members “always” are invited to top management
meetings (8%).
To summarize, IR has been established as an independent corporate function in Germany.
The department commonly reports directly to C-level executives, in most cases, the CFO and
less frequently the CEO. However, the IR department, on average, is consulted only
occasionally during top-level strategic management meetings, which places the IR
department at a level of top management involvement comparable to the corporate
communications function. Furthermore, our data indicate that in larger companies, IR
involvement in top management meetings is more common, which could be a result of more
advanced stages of professionalization among these departments.
RQ2 focuses on the state of IR departments’ strategic planning, which will be addressed
in two respects: orientation toward short- vs long-term objectives and alignment with the
corporate strategy.
Our results show that 51% of IR departments direct their priorities toward long-term
objectives, 21.6% focus on mid-term objectives, 19.6% are aligned with objectives for the
respective financial year and 5.9% are driven by current situational requirements (Figure 4).
We did not find an effect from company size on this overall finding.
In terms of the alignment of IR planning processes, 70.6% of the respondents stated that
their planning is aligned with the overall corporate strategy; 11.8% are aligned with the
corporation’s overarching, formal communication strategy; 15.7% set goals within the IR
department; and 2% focus on task-specific goals. None of the respondents indicated that their
work is not guided by formal strategies or objectives.
Alignment with the corporate strategy is particularly common among mid-size companies
(100% of the MDAX companies), which incidentally also most frequently indicate reporting

Figure 3.
Invitation to top
management meetings
dealing with
organizational
strategic planning by
indices shown in
percentage and mean
value (n 5 51)
 Strategic
investor
relations
management

Figure 4.
Priorities in financial
communication in
percentage (n 5 51)

lines to the CEO. Among smaller TecDAX companies, 42.9% reported aligning their
objectives with goals within the IR department. This indicates that within smaller companies,
IR objectives lack a clear link to overall strategic priorities – again possibly an indicator of
earlier professionalization stages.
RQ3 examines the strategic objectives that IR departments pursue. Figure 5 presents the
seven examined objectives’ mean scores. The results highlight IR’s roots in governance
requirements. Reporting and compliance obligations are viewed as most pressing among IR
objectives, but managing relationships with the financial community emerges as the second-
most important objective. Supporting top management decisions also is viewed as an
important goal. Shielding top management is among less-important objectives, but this
challenge can be viewed as especially situational, as it is required only in cases of likely or
actual shareholder interventions. Fostering internal capabilities was rated as the least
important objective, which is somewhat at odds with what the contributions framework put
forth by Zerfass and Volk (2018) suggests.
Finally, RQ4 focuses on the evaluation of the IR function. This question was examined in
two respects: alignment of evaluation practices with corporate strategic objectives and KPIs
commonly applied in evaluations conducted by the IR function.
According to our findings, 35.3% of German IR departments evaluate their activities with
regard to their contribution to the attainment of overall corporate objectives, 25.5% evaluate

Figure 5.
Strategic priorities of
the IR function (n 5 51)
JCOM the contribution to the attainment of communications objectives, 13.7% refer to KPIs set
within the IR department and 3.9% refer to task-specific KPIs. Interestingly, 21.6% state that
there is currently no systematic evaluation of the IR program at all at their companies
(Figure 6).
Accordingly, a notable inconsistency exists between the planning and evaluation of IR.
While all departments report some form of planning, and planning commonly is aligned with
corporate objectives, the evaluation of IR rarely is geared toward explaining how the function
contributes value to the organization. Larger companies (DAX) are more likely to evaluate
their IR programs in terms of contribution to overall corporate objectives (40%) or on
strategic communication objectives (36%). Smaller companies present a very different
picture: In TecDAX companies, evaluation often refers particularly to department-level KPIs
(28.6%) or even task-specific KPIs (28.6%). In total, 50% of SDAX companies stated that no
systematic evaluation of their IR program exists.
Figure 7 presents the most important measurement criteria as judged by German IROs.
We found that qualitative criteria clearly are viewed as the most important in today’s
evaluation efforts: individual meetings with top shareholders (m 5 4.55), compliance with
regulatory requirements (m 5 4.48), responsiveness to investor inquiries (m 5 4.43), feedback
from the financial community (m 5 4.28) and sell-side analyst coverage quality (m 5 4.18).
It is noteworthy that these priorities within IR departments correspond roughly with the
strategic objectives laid out in Figure 5, specifically “reporting and compliance,” “relationship
management” and “share marketing.” However, while “management support” is viewed as
the third-most important IR objective, none of the five most important evaluation criteria
touches upon this internal dimension.
In terms of differences based on company size, it is worth noting that compliance with
regulatory requirements is the most important criterion (m 5 4.80) for smaller companies in
the TecDAX and SDAX indices, while this is the least important of the top five criteria
(m 5 4.27) for larger companies. This may be because within smaller companies, which
feature small IR departments, a major share of IR resources is devoted to fulfilling regulatory
requirements, while larger companies are in a position to devote resources to IR tasks beyond
immediate compliance requirements. Overall, our findings, in terms of common measurement
approaches, correspond with survey results presented by Ragas and Laskin (2014), showing
that IROs in the USA prefer to apply a combination of quantitative and qualitative metrics to
measure their programs’ success.

Figure 6.
Evaluation of IR
program in
percentage (n 5 51)
 Strategic
investor
relations
management

Figure 7.
Perception of
importance of
measurement and
evaluation criteria
stated as mean
value (n 5 51)

Discussion and conclusions

Just as IR remains a relatively recent corporate function, IR research remains an emergent
discipline. Since the mid-1990s, several studies have conceptualized the IR function and
discussed its role in fostering productive relationships with capital markets’ participants
(Tuominen, 1997; Rao and Sivakumar, 1999; Deephouse, 1997; Dolphin, 2004; Laskin, 2009).
Simultaneously, more and more studies have addressed operational challenges in IR,
particularly in terms of employing and designing communication instruments (cf. Geerings
et al., 2003; Marston, 2003; Pozniak, 2010; Ditlevsen, 2012). However, many of these studies
focus on the US context.
To date, few studies have examined the strategic management of the IR function, though
this does not imply that previous studies have not discussed the strategic importance of IR.
Instead, there is significant agreement on the fact that fostering good capital market relations
not only increases shares’ visibility and liquidity, but also reduces information asymmetry
and uncertainty, and fosters trust, thereby enhancing strategic leeway for a company’s
management (Rao and Sivakumar, 1999; Laskin, 2011; Hoffmann et al., 2016).
Strategic communication research teaches that communications functions need to signal
their value contribution to internal stakeholders, especially top management, to garner
support and gain strategic relevance. In this effort, systematically planning and evaluating
communications programs are key. To date, only two studies, based on US data, have
addressed the strategic management of IR programs, with an emphasis on evaluation (Ragas
and Laskin, 2014; Ragas et al., 2014). The authors found that IROs prefer to apply a
combination of quantitative and qualitative metrics to measure their programs’ success.
Notably, they place the greatest value on metrics that are qualitative, nonfinancial and
relationship-oriented. Our study builds on these findings, but widens the perspective by also
examining planning practices, strategic objectives and the connection between planning and
evaluation.
We focused on the German capital market, which, while less established than the US
market, has undergone rapid professionalization in recent years and today ranks among the
most important and transparent markets internationally (PwC, 2019; Friedman, 2019). We
demonstrated that within German Prime Standard corporations, IR has established itself as
an independent function, most commonly reporting directly to the CFO, but in some
instances, to the CEO. Almost three-quarters of surveyed IR managers reported that their
department is consulted during top management meetings on strategic issues at least
occasionally – corresponding with similar findings on the corporate communications
JCOM function (Zerfass et al., 2017a, b). Overall, this paints the picture of a corporate function of
some relevance to listed corporations’ management, comparable to that of the corporate
communications function.
While analyzing surveyed corporations’ planning priorities, we found that about half
report gearing their departmental objectives toward long-term goals. More than 70% of the
respondents stated that departmental objectives are derived from the corporate strategy,
corresponding with what established strategic communication models would prescribe.
It should be noted that in IR in particular, priorities very much may be driven by current
events, such as external shocks. IR plays a key role in ensuring transparency in turbulent
circumstances, but this functional characteristic should not dissuade IROs from engaging in
professional management practices, such as planning and evaluation.
When examining evaluation practices in German IR departments, we found that only
about one-third of respondents evaluate their performance in regard to contributions to
corporate objectives, one-fourth focus on communications objectives and one-fifth do not
conduct any systematic evaluation at all. Therefore, an apparent disconnect exists between
strategic planning and systematic evaluation. In terms of substantive objectives, we found
that top management support is viewed as an important IR contribution, but little attention is
paid to this internal dimension in evaluation efforts.
Our findings on IR management in German Prime Standard corporations align with
insights from strategic communication research that has found communications
professionals increasingly embrace management practices such as strategic planning
(Sandhu, 2009). However, a lack of systematic evaluation remains, partially due to a lack of
understanding concerning the purpose and importance of measurement (Zerfass and
Viertmann, 2017; Macnamara and Zerfass, 2017; Zerfass et al., 2017a, b). This finding is
important considering that the consistent application of management practices to
communications programs is a prerequisite for garnering acceptance and esteem among
top executives.
Our findings also can be interpreted as highlighting an intermediate stage of
professionalization of the still-emergent IR function. While IR has been established as an
independent function with a notable role in strategic leadership, the strategic management of the
function is still evolving. We found that while some form of planning is the norm, IR departments
within smaller companies tend to focus more on departmental objectives rather than deriving
objectives from the corporate strategy. Also, systematic evaluation remains lacking within many
smaller companies’ IR departments. We found that IR managers from smaller companies are
consulted less frequently during top management meetings on corporate strategy.
Our study is subject to several limitations: First, it is based only on data collected from
German Prime Standard corporations; therefore, our findings complement previous findings
primarily from the USA. Thus, more research is necessary to allow for international
comparisons. Second, while satisfactory in the context of quantitative IR studies, the
response rate of our study was only 32%. Accordingly, our survey also may be subject to
self-selection bias. The average level of strategic IR management among German listed
companies actually may be somewhat lower than reported in these pages, as large listed
companies are somewhat overrepresented in our sample. Furthermore, while the
questionnaire guaranteed anonymity, there may be some social desirability bias affecting
questions of strategic alignment, as participants may wish to be perceived as professional
and strategically relevant. Third, further analyses of potential antecedents of strategic IR
management are necessary, such as budget size, but could not yet be conducted due to
restrictions in access to the necessary data. Fourth, our study examined perspectives within
the IR function exclusively; therefore, this study cannot provide insights into which
contributions are, in fact, most valued by top management, or how top management
evaluates the success of their IR department. Finally, this study’s findings may be contingent
upon current events, such as corporate crises, transactions or shareholder activism. In such Strategic
events, IR may be more salient among corporate leaders, and IR departments may adjust investor
practices, such as planning and evaluation, to withstand heightened scrutiny.
However, we still contend that our study provides a valuable contribution, in that it
relations
addresses an apparent research gap. Our analysis highlights how frameworks from management
communication management can be applied to the IR function. We demonstrated that IR
departments are undergoing a professionalization process that may be related to capital
markets’ maturity, but also could be due to the listed corporation’s maturity itself. With
increasing capital market experience, companies may push forward the sophistication level
in their strategic IR management practices – both in terms of objectives and evaluation.
Future research may delve deeper into how top management views the evolving role of IR.
Also, more research is needed into how IROs make sense of corporate strategy and derive
department-level strategic objectives and measures, applying a strategy-as-practice
perspective (Whittington, 1996).

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practice”, Journal of Public Relations Research, Vol. 22 No. 2, pp. 182-208.

Appendix
Survey questionnaire
(1) Organization
Thinking of the functional organizational chart of your company, the IR department is
 an independent department
 part of the Corporate Communications department
 part of the Finance department
 other:_[open]
At your company, the head of IR is a member of the executive board.
 reports directly to both CEO and CFO
 reports directly to the CEO
 reports directly to the CFO
 reports to a member of the executive board other than the CEO or CFO
 does not report directly to a member of the executive board
How often is it the case that IR will be invited to top management meetings dealing with organizational
strategic planning?
 always
 very often
 sometimes
 rarely
 never
(2) Strategic management
When you think about the financial communication of your company, how would you describe its choice
of priorities:
 Our financial communication is geared toward long-term objectives.
  Our financial communication aims to support mid-term objectives. Strategic
 Our financial communication supports the objectives for the respective financial year. investor
 Our financial communication is determined by the respective quarters’ development.
relations
management
 Our financial communication is driven by current situational requirements.
Planning within the IR department is aligned with the overall corporate strategy.
 the corporation’s overarching, formal communication strategy
 goals set within the IR department
 task-specific objectives
 Our work is not guided by formal strategies or objectives
When evaluating our IR program, we refer to its contribution to the attainment of overall corporate
objectives
 its contribution to the attainment of strategic communication objectives
 KPIs set within the department
 task-specific KPIs
 We currently do not systematically evaluate our IR program/financial communication.
[Filter questions: all but last answer option]
Please rate the importance of the following KPIs for the evaluation of your company’s IR program.
Indicate the importance on the following scale from “not important” to “very important.”
Scale: not important – slightly important – moderately important – important – very important
 Presentation(s) to management board
 Investor perception studies
 Individual meetings with top shareholder
 Financial news media coverage
 Responsiveness to investor inquiries
 Composition of shareholder base
 Feedback from financial community
 Valuation of company stock relative to peers
 Sell side analyst coverage quality
 Sell side analyst coverage quantity
 Liquidity/trading volume
 Compliance with regulatory requirements
 Change in company stock price
 Share price volatility
 External recognition/awards
 Other: [open]
(3) Strategic objectives
How important are the following tasks for the IR department?
Scale: not important – slightly important – moderately important – important – very important
JCOM Reporting and compliance:
 Compliance with regulatory requirements
 Providing detailed financial information
 Providing reliable guidance to the financial community
 Meeting the information requirements of the financial community
Share marketing:
 Gaining publicity for the company/its shares
 Attracting new investors
 Ensuring a favorable perception of the company
Relationship management:
 Building and fostering relationships with the financial community
 Facilitating dialogue between the company and the financial community
 Mediating between the interests of management and the financial community
Shielding:
 Protecting management from activist shareholders
 Prevention critical shareholder interventions
 Listening to and understanding capital market perspectives
 Monitoring shareholder sentiment
Reputation management:
 Fostering a good capital market reputation
 Dealing with sustainable development and social responsibility topics
Fostering capabilities:
 Coping with the digital transformation
 Benchmarking with peer corporations
 Developing talent and enhancing competencies within the department
Management support:
 Communicating the financial community’s interests/perspectives to management
 Supporting executive decision-making
 Coaching/preparing executives for communication with shareholders, media, etc.
 Positioning the CEO, CFO and top executives as leaders

Corresponding author
Christian Pieter Hoffmann can be contacted at: christian.hoffmann@uni-leipzig.de