How to Optimise IR Within the Existing Legal Framework

Poul Lykkesfeldt () and Laurits Louis Kjaergaard ()

Chapter Chapter 15 in Investor Relations and ESG Reporting in a Regulatory Perspective, 2022, pp 123-126 from Springer

Abstract: Abstract We explore how to optimise IR given the transforming financial markets. The consumption of buy-side research consumption has decreased. Yet, the industry seems to have mitigated the effects in large cap companies by reducing their attention to SMEs. Therefore, the clear losers of MiFID II are the SME companies that have realised a worsening price efficiency, higher bid-ask spreads, lower research attention and higher volatility. In addition, MiFID II is concrete on investor classification that the investment bank must have a clear onboarding procedure of its clients and need to make sure that they receive information appropriate to their classification. Marketing is not subject to investor classification, because it is not deemed investment research. This allows the investment bank to be in a unique situation because it can leverage its brand and quality of its analysts to publish marketing material on behalf of a company to both its onboarded professional clients and the general public. Particularly for SMEs, the IRO has three methods to mitigating the adverse effects of MiFID II: commissioned research, commissioned corporate access and digital IR which typically also come at a cost.

Keywords: Bid-ask spreads; Price efficiency; Commissioned research; Commissioned corporate access; Digital IR; Research costs; Brand ambassadors; Shareholder programme (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-05800-4_15

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DOI: 10.1007/978-3-031-05800-4_15

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