Investor relations beyond financials Non-financial factors and capital market image building

Purpose - In this paper, the authors aim to identify a range of non-financial factors that play a role in the formation of a company's image, and ultimately its valuation, on capital markets. By identifying and highlighting their relative importance to the perceptions of equity analysts, the authors seek to show that investor relations are best understood as a strategic communication function rather than a mere purveyor of pure financials. Design/methodology/approach - The findings are based on a two-tiered approach, relying on qualitative interview data collected among 42 equity analysts and a subsequent exploratory factor analysis performed on data obtained from a survey among 134 buy-and sell-side analysts. Findings - The authors argue that equity analysts consider the following eight categories of non-financial information when forming an impression of a company: the stakeholder relations of an organization, its corporate governance, its corporate social responsibility, its reputation and brand, the quality of its management, and its strategic consistency. One of the most important factors, however, is the quality of a company's communication, which underscores the strategic role that the investor relations function should play in fostering positive capital market relations. Research limitations/implications - Being explorative in nature, the categories and scales proposed need further validation. Furthermore, in future research, it would be worthwhile to explore not only the role of non-financials in image formation but also the interplay between financials and non-financials in image formation. Practical implications - Investor relations professionals should consider the factors presented in this study in their work in order to ensure that they cater to the actual information needs of capital market participants. The consideration of non-financial factors enhances the quality of financial communications. It also enriches the understanding of the strategic communication tasks of the investor relations department. Originality/value - This paper describes an empirical analysis of the management of corporate relationships with financial audiences, a stakeholder group increasingly focused on by communications research. It represents a contribution to the further establishment of investor relations as a strategic communication function.