Effective financial public relations creates and maintains investor confidence. It builds positive relationships with the financial community by providing corporate information. Increased interest in investor relations following the Texas Gulf Sulphur case has greatly increased public relations involvement in the financial reporting of corporate information. With Enron's bankruptcy amid criminal charges against its accounting and financial advising firm, Arthur Andersen, the spotlight has again been placed on the need for accurate, current financial reporting.

Strong financial relations programs, characterized by responsiveness, openness, and regular communications, help lower the cost of capital for businesses. A key function of financial relations is to provide prompt disclosure of corporate news that is significant to the financial community.

Hostile takeover attempts through tender offers or management takeover through a proxy fight are two key financial public relations crises that may face management of a corporation. Public relations must become intimately involved in the battle for control when these crises occur.

Audiences for financial relations include individual stockholders, financial analysts, and the financial media. Major tools of financial relations to reach these key audiences include annual reports and annual stockholder meetings. But with many new technologies the company's financial reporting also includes use of cable or satellite television, placement on the Web, or discussions with key stakeholders through video conference calls.

Effective financial relations gives a business increased support for its management, higher stock prices, and greater ease in attracting new capital.

"Today, investor relations is not only a job that entails communicating a company's strategic direction, it is a discipline that requires its own strategic design."
     —Geraldine U. Foster, Senior Vice President
       Schering-Plough