Over the last 30 years investor relations has developed in leaps and bounds. The concept of investor relations was first introduced in1953 by Ralph J. Cordiner, then chairman of the board General Electric. Cordiner used it to describe communications with the retail shareholders of his listed company. He set up an independent functional unit for it and, in retrospect, his approach shaped not only the concept but also the practice of financial communication. Yet it took over 30 years for investor relations to establish itself as a management practice and structural element in US companies.
If we take a look at Europe we see that the spread of investor relations management practice in capital market-oriented companies took shape at the earliest in the 1980s, and more frequently in the 1990s. Companies in the UK were active somewhat earlier than continental companies due to their cultural affinity to their big brother, the USA.
In the meantime the professionalisation of investor relations in terms of communication with the so-called financial community has rapidly advanced. It begs the question: why did investor relations as a function and as a profession only begin to establish itself in the second half of the 20th century? Joint stock companies have existed since the 15th century and so, too, shareholders as stakeholders in companies.
A research project carried out at the University of Leipzig explored how financial communications became institutionalised as a management practice in Germany. It surveyed a total of 80 investor relations managers in corporate enterprises, buy and sell side representatives, ratings agencies, financial journalists, interest groups representatives, finance experts, regulators and legal consultants, as well as scientific representatives. Its findings can act as a best case study for European investor relations professionals wanting to gain a better understanding of this fascinating field.
