eThesis - School of Business electronic theses

Objective of the Study:

The purpose of this study was to discuss the means the implementation of good interpersonal investor communications and how a favourable capital market image is created. In recent years, there has been a growing interest in IR communication but despite the increase in academic research, there has only been a few studies focusing on the non-financial aspects, and particularly the image-building function. The main themes of the present study are how successful IR actions can create and maintain a favourable capital market image, what are the factors influencing it, and how to overcome threats to the relationship between a company and its financial stakeholders. Due to the regulated context of capital markets, image-building actions, similarly to all IR communication, must above all be based on facts. However, additional value is created through communication, which is why interpersonal relationships play a key role in creating the trust and credibility needed for a good capital market image.

Methodology and the Theoretical Framework:

The study was conducted as a qualitative research and the data was gathered through six semi-structured interviews with professionals, who in their line of work, regularly take part in IR communication. The theoretical framework of the study was constructed based on the previous literature in the field of IR and image-building. It elaborates how the financial data, image-building factors, interpersonal communication, management and its actions in crisis and change, all influence the capital market image in a complex ecosystem.

Findings and Conclusion:

The main findings of the study point out three sectors in implementation of successful IR communication and image-building; firstly, the basic communication needs to be on an adequate level and follow the regulations. The IROs need to be competent and the essential topics should be covered. These factors might not bring additional value but are a necessity. Secondly, succeeding well with factors such as consistency, credibility, openness and proactivity, can bring additional value to the company by improving the capital market image substantially. One crucial factor, trust, is built when actions and words are in proportion. Thirdly, the company should invest in communicating strategic changes, and especially in a crisis situation, as rebuilding a favourable capital market image takes a great deal of effort and time.