CHAPTER 2 LITERATURE REVIEW
2.4 Roles of Investor Relations
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charisma, expertise, information, reward, and sanctions—to influence decisions” (as cited in Berger, 2005, p. 7).
To sum up, the keys of whether IR can be included or gain a seat in the dominant coalition are: (1) if management understand the value of the program, and (2) the professional competence of the practitioners (Berger, 2005).
Mintzberg (1983) believed that the power structures and processes in modern organizations must be fully explored or they would not improve and function better.
Berger and Reber (2006) took the same stance when discussing the power relations of public relations profession. However, the question of power relations of IR remains unclear. The situation of the practice in Taiwan might be even more different since IR is a comparatively young profession here. How influential IROs really are in their corporations and how they are valued is closely related to whether they can fully play their roles effectively. It would be interesting to see how IROs perceive the issue of power relations, how they are valued and how they interact with the top management in their corporations.
RQ3: How do IROs perceive the power relations of themselves and the top management in their corporations?
2.4 Roles of Investor Relations
Understanding the power relations issue also helps define the roles of IR.
Organizational roles are “recurring actions of an individual appropriately interrelated with the repetitive activities of others so as to yield a predictable outcome” (Katz &
Kahn, 1978, p.189). Organizational roles guide practitioners what and how to do, and
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summarize the special features of organizational member’s activities and behaviors (Dozier & Broom, 2006).
At the beginning, scholars tended to focus on IR functions of maximizing the market value of the firm. Marcus and Wallace (1997) then gave a different approach and defined the three phrases of IR roles. It was first a communication role for delivery the company’s actions and then turned to a financial role focusing on financial functions and financial results. Finally, IR transformed into an active marketing role that promote their companies.
Gregory (1997) and Dolphin (2004) defined the role of IR in a different way, considering IR as a strategic role in the corporation. They suggested that IR plays a crucial part of the corporate communication strategy, which usually aims at forming a positive corporate image to stakeholders.
Laskin (2014) tried to investigate IR as a public relations function, which is categorized by communication scholars, while the result showed that IR were valued more on its financial role in practice.
The boundary-spanning role is also an important concept when discussing the role of IR. IR serves as the liaison between the company and the financial community, delivering information between inside and outside the organization (Grunig & Hunt, 1984; Ragas, 2011).
The roles of public relations have been an extensively studied topic in the public relations field. To discuss deeper on the IR roles, the two predominant frameworks of the public relations roles are taken as references.
The first one is the five-role typology of public relation by Broom and Smith (1979). They classified public relations practitioners into five types, including expert
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prescriber, technical services provider, communication facilitator, problem solver, and acceptant legitimizer. Some features of these roles can also be found in IR’s tasks and functions.
The other predominant framework of the public relations roles is the manager-technician dichotomy by Dozier (1984). This typology has been used widely in numerous role studies. The managerial perspective is usually connected with the idea of being a member of the dominant coalition in the organization as mentioned in the previous power relations section.
The situation of IR has not been systematically studied unlike public relations.
It is a necessary question to have a more thorough picture of IR’s roles before going for further research on the profession. Thus, the following research question is asked:
RQ4: What are the roles Taiwanese IROs play in their organizations?
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CHAPTER 3 METHODOLOGY
3.1 In-depth Interview
In-depth interview is used as the research method in the current study, which is a methodology often used in qualitative research. In-depth interview is helpful for exploring complicated and descriptive questions. By talking and interacting freely, researchers can have a deeper discussion on the topic and interviewees can better explanation of their experiences, motivation, viewpoints and attitudes toward a certain question. It also provides the opportunity to ask follow up questions.
Since IR is an under-explored research topic in Taiwan, collecting direct information and viewpoints from experienced IROs helps understand how the profession is actually practiced in Taiwanese industry and narrow the gap between the practice and the academy.
3.1.1 Semi-structured interview
Structured, semi-structured, and unstructured interview are the three fundamental types of research interview.
The questions, the ordering and the phrasing of the structured interview are unified. The process of the interview is highly controlled by interviewer. This is usually used for questionnaire survey on topics that had been highly developed. On the other hand, the unstructured interview has no specific guideline for interview process but has one topic for free discussion. The interview is highly flexible (Berger, 2014).
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Semi-structured interview is a mix of structured and unstructured interview.
This “open-ended yet directed, shaped yet emergent, and paced yet unrestricted”
(Charmaz, 2006, p. 28) approach makes sure that the interview answers questions of the research while at the same time flexible for further discussion on their own experiences and related topics.
Since the current study aims to explore how IR is practiced, their roles and the issue of power relations in Taiwanese corporations, the interview has to correspond to research questions. Semi-structured interview is thus adopted in the current study. The outline of the interview questions are based on the purpose of the study and the literature review, and all the interview questions are open-ended to answer research questions.
3.1.2 Interviewees
To meet the needs of this study, there are few selection criteria for interviewees:
(1) Interviewees are experienced IROs who have worked as an IR for years. Their ranks or job titles are IR managers (or above).
(2) The industries of the interviewees are diverse instead of concentrating in the same industry.
(3) The number of the interviewees depends on saturation of data. While, the minimum number set for the current research is ten so as to gather sufficient opinions from different interviewees.
The current research includes thirteen interviewees from twelve publicly traded companies listed on Taiwan Stock Exchange. All of the interviewees would
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like their identification to remain anonymous. The industry types of these companies include three companies from the computer and peripheral equipment industry, one from the optoelectronic industry, one from other electronic industry, one from electronic and mechanics industry, two from traditional industry, one from tourism industry, two from finance industry and one from the communication and Internet industry (also referred as telecommunication industry)3. This helps understand how IR is practiced differently or similarly in different industries and prevent bias results because of similar backgrounds as well.
The interviewees are all from scaled and well-acknowledged publicly traded companies. The proportion of a company’s qualified foreign institutional investors (QFII) shareholders is usually considered one of the important index for IR’s performance measurement, and the QFII shareholder proportion (based on the data on June 15th, 2016) of the interviewee’s companies are three with 1-20%, three with 21-30%, two with 31-50%, and four with more than 51% QFII holdings.
The interviewees are all very experienced in IR work. The average IR service year of them is 12 years (maximum: 17 years; minimum: 5 years). Their knowledge of the IR circle and IR work provides precious information of the occupation and the practice in Taiwan.
3 The industry types is based on how these companies are categorized on Taiwan Stock Exchange.
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Table 1. List of the Interviewees
No. Industries Departments Job Titles Gender
IR Seniority (years)
1 Traditional industry Finance IR Manager (經理) Female 9
2 Finance Corporate Development Division
Corporate Development Division
Senior Vice President (副理) Female 9
3 Finance Deputy Manager (副理) Female /
4 Peripheral equipment Finance Director, IR/PR Male 16
5 Electronic and mechanics Corporate Governance Center Deputy Director (副處長) Male 14
6 Optoelectronics Treasury Management Department Manager (經理) Male 10
7 Telecommunication Finance, Investor Relations Senior Director (資深處長) Male 12
8 Other electronics Finance and Administration Center Deputy Director (副處長) Female 16 9 Peripheral equipment Investor and Public Relations Senior Director, IR/PR (資深處長) Female 13
10 Finance Finance Senior Associate Manager (資深協理) Female 13
11 Traditional industry Finance Manager (經理) Female 9
12 Tourism Finance CFO (財務長) Male 20
13 Peripheral equipment Finance, IR Division Director (副處長) Female 5
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3.2 Interview Procedure
Each interview took approximately 40 to 50 minutes. At the beginning of the interview, the interviewer explained to the IROs the purpose of the study and the process of the following interview to let the interviewees understand the theme and the basic structure of the interview. The researcher informed IROs that they can choose whether to reveal their identity or not to relieve their concern about answering sensitive questions related to their companies. All of the interviewees would like to keep their identity anonymous. The interviewer also asked for interviewees’ approval of recording. Eleven of the interview were recorded with digital voice recorder and one by note-taking. Six of the interviews were done face-to-face and the other half is done via telephone.
The order of the interview questions was basically in line with the interview guide but was also flexible depends on the interview context. During the interview, the interviewer prevented to talk too much and let interviewees share their own opinions freely. The interviews were recorded into transcripts for data analysis (Berger, 2014).
3.3 Interview Questions
The interview were divided into four parts: background information, opinions on the roles of IR, issue of power relations of IR practitioners in the corporation, and opinions on IR’s situation in current and future Taiwan industry. IR Insight’s annual global IR practice surveys by IR Magazine (IR Magazine, 2015) was one of the important references for developing this interview structure. Studies on public relations roles were also used as references for question design (Johansson & Larsson,
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2015; Moss, Nesman & DeSanto, 2005).
As a semi-structured interview, some unprepared questions were brought out during the interview. All the questions were open-ended and the interviewees were encouraged to talk about their own viewpoints freely.
3.3.1 Investor relations practitioners in Taiwan
Interviewees’ background information was asked at the very beginning of the interview to have a brief overview on who usually serves in IR.
These questions included “What is your job title?”, “What’s your education background?”, and “Please share your career experiences before and after becoming an IR.” (Laskin 2009; IR Magazine, 2015)
There were also following-up questions such as “How do you think these experiences (education background and working experience) help you in your IR work?” to have a deeper discussion on the issue.
3.3.2 The roles of investor relations
Interviewees were asked questions related to their tasks and goals for IR.
This is to clarify the roles of IR, how it is positioned and how it functions.
For the first question “How do you define the profession?”, the interviewees were firstly asked to define IR freely. They were also asked which fields/ function they think IR belongs to and what goals and tasks they think to be most important for IR.
“How IR is positioned in your company?” was to understand how
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corporations put IR in corporate structure. Is it an independent department or does it belongs to a certain corporate function? Who do IR practitioners report to?
What’s IR practitioners’ opinions toward this kind of arrangement? These are all questions that the current research wants to know how corporations position and perceive the importance of IR. This is also related to the issue of power relations.
The relationship between IR and public relations is another topic included in this part. “How do you/ your team interact with public relations department/team in you company?” How IR cooperates with public relations and what are their thoughts about the same and the difference between IR and public relations were all asked here.
The next role topic that this research focuses on is communication function and relationship management strategy of IR when facing external and internal audiences. “Who are your major external audiences?” and “How do you interact and communicate with them?” were asked to see IR practitioners’ interaction with external audiences. Among all the external audiences, “How do you interact with media?” was specifically asked to understand the relationships between IR practitioners and media since media is a unique external audience different from the investment community.
For interacting with internal audiences, “How do you interact with people from different department?” and “How does your company value the importance of IR’ internal communication function?” were the main questions.
“What do you think to be the most important goal and function of IR?” and
“What do you think to be the most difficult tasks of IR?” were the last two questions in this part of IR functions and roles.
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3.3.3 “Having a seat at the table”
The issue of power relations in IR practice is another important topic in this study. To have a look at the current situation in industry, interviewees were asked to share their own experiences regarding IR’s influence and how IR is valued in their companies and their opinions on the arrangement.
Questions such as “How do you think about IR’s position in top managerial level and why?”, “What are the roles that IR play when top management team is making decisions?”, “How do your company value IRO’s opinions?”, “What would happen if IR brings up opposite opinions?” and “How do you interact with the top management (i.e. C-suites or BOD) when executing IR work?” were included (Berger, 2006; Reber & Berger, 2006; Dolphin, 2004).
Also, interviewees were asked to share their opinions on the roles of IR when the company is making significant decisions.
3.3.4 Insights on IR practice in Taiwan industry
At the final part of the whole interview, the interviewees were asked to share their opinions on IR’s development and environment in Taiwan industry. Guiding questions included “How do you think IR is valued in Taiwanese industry?” and
“What do you expect about the future for IR in Taiwan?” This part was to understand some facts of IR practice in Taiwan. Interviewees were also asked to share their own opinions freely in the end of the whole interview.
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CHAPTER 4 RESULTS
Although interviewees are from different industries and different companies, they share same opinions on most topics. The interview results are sorted into the following sections according to interview questions and research questions.
4.1 Backgrounds of Investor Relations Officers
All the interviewees graduated from college of commerce and many of them have an MBA degree. Only three of them majored in other non-financial related fields in undergraduate education (English literature, psychology and tourism respectively).
This is similar to many survey results that IROs mostly have a financial related educational background. This is closely related to the target audiences IROs face.
“Since our clients are portfolio managers or analysts, finance is a common language. If you are not equipped with this language, you might have difficulty working as an IR.” (Interviewee No.11)
In terms of working experiences, there is only one interviewee starting her career as an IR after graduating from school (Interviewee No.8). She was a finance planning specialists and at the same time responsible for IR tasks at that time. Most of the interviewees have other working experiences before becoming an IR. Their previous professions are often in financial related fields such as accounting, treasury, underwriting, securities analysts and etc. Only two interviewees have different work experiences before. Interviewee No.10 worked as a journalist before she became a securities analyst. She thought the training of journalist is helpful especially in terms of “information compilation, collection and analysis.” (Interviewee No.10)
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Interviewee No.12, a CFO from the tourism industry, graduated from tourism school and worked as a hotel staff at the very beginning before he studied in financial school.
“I started from working as a waiter, a bartender and then became a housekeeping staff and a duty manager. Afterward, I went to Australia to study cost controlling courses and became cost control manager in Taipei Hilton Hotel.” (Interviewee No.12)
IROs believed financial-related backgrounds are very helpful since financial knowledge is a must for IR work. Besides this, many IROs brought up the value of having knowledge of the industry the company is in.
“What is more important is that you need to have sufficient understanding about the industry. You also need to have passion to learn and discover your products and techniques.” (Interviewee No.9) Interviewees with non-financial backgrounds confirmed the idea and said that these experiences are useful since they can have “a thorough understanding of this industry and its operation.” (Interviewee No.12)
4.2 Functions of Investor Relations
Communicating and delivering company’s information to audiences is the core of IR tasks. The process consists of information production, information dissemination, and information collection. IR practitioners accomplish all these three parts to make sure the quality of information they give and receive.
To manage information delivery well, IR practitioners also work as researchers.
They monitor the markets their companies are in and study future trend. This activity is known as “market intelligence.” Market intelligence is crucial for IR to communicate with the investment community as well as to provide useful information
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to the management team.
4.2.1 Information production
Producing information is the base of information flow. Information production is important since it not only influences how the investment community views and evaluates the company’s current and future performance but also determines its corporate image.
Financial information is the key topic that the investment community is interested in. IROs interact with finance department very often to receive latest financial data and then think about how to interpret these numbers. Some IROs also cooperate with public relations teams to make sure they are on the same page.
IR is like the “makeup artist of a corporation.”
Non-financial information is another crucial part that IROs focus on.
Besides financial data, the investment community requires more non-financial information such as current operation situation, strategic plans and etc. Sometimes they also ask information that is not directly related to profit-making topics such as the development history of the company, shareholder structure and the members of BOD.
As a result, IROs need to have accesses to non-financial information including latest products, research and development, strategies and etc. They gather information from different parties and reproduce it to useful and
As a result, IROs need to have accesses to non-financial information including latest products, research and development, strategies and etc. They gather information from different parties and reproduce it to useful and