The value of (private) investor relations during the COVID-19 crisis

We investigate the value of investor relations (IR) and find firms with strong IR to experience between five and eight percentage points higher stock returns than those with weak IR during the COVID-19 crisis. Firms with better-quality IR are also associated with higher investor loyalty and appear to have attracted significantly more institutional investors over the crisis period. This suggests that a firm's IR contributes to value generation by enhancing credibility with shareholders and by diversifying its shareholder base. After decomposing IR into public and private transmission channels, we find the private IR function to be the main driver of our results.