Investor Relations and Firm Value

Abstract

It has been widely discussed that effective investor relations activity by the companies leads to reduction in information asymmetry which has a positive effect on firm value. In our study we observe the effective online representation of investor relation practices by means of evaluating current and historical share prices, shareholding patterns, corporate news, financials and information on company's websites. We find that there exists a positive relationship between this corporate transparency and the value of the firm, which is dependent on the market capitalization and the sector in which the firm belongs. The study includes all the constituent firms of the BSE 500 index of the Bombay stock exchange and it aims to provide an understanding of the pattern of investor communications in an emerging economy like India.