- First, the assumption that only operational metrics can move stock prices is a very weak foundation for a Fair Disclosure policy. There are big and little hints given in AR, and even smaller suggestions are the grist of insider trading court cases all over the world. From personal experience (I used to run Lighthouse Investor Relations) I’ve seen how controlling the flow of other information to intermediaries can manage the volatility of share prices. So, there can be situations where the common assumptions of IR really contradict the realities of AR.
- Second, TCS is making the right choice is keeping AR in the CMO’s organisation and IR in the CFO’s domain. However, the functions are not fully separate if they both report to the head of IR. An IR professional will manage, direct, hold accountable, and have operational control. In most firms, the head of IR would naturally end up using comparable notions across the two teams. As this article argues, that can lead in many directions.
Even so, this isn’t a move we think companies should emulate. Analyst relations produces asymmetries that investor relations should see as a risk. The opportunities for uneven disclosures are too high for investor relations professionals to ignore permanently if they manage AR.