Are investor relations officers management's advocates?

I am back from my trip to Russia and trying to catch up with all the readings and emails I missed during three weeks without accessing the Internet (well, to be honest I did look and respond to some emails).

Anyway, I came across an interesting post at the Investor relations musings blog: What makes for great investor relations? There, John Palizza writes: "Some people like to think of investor relations as an advocacy position, similar to the way our trial system works." This phrase caught my attention because this is exactly what I was finding when I was conducting my research on the history of the investor relations profession. I identified three periods in the IR history, the second of which spanning from about 1970 to 2000, is exactly that: advocacy. IROs try to explain, defend and advance the management's point of view.

Summarizing my research results for the Institute for Public Relations I concluded that this second era of the history of investor relations was characterized by financial expertise heavily dominating investor relations: accountants and financial analysts often with no expertise in strategic communications were hired to perform an investor relations function.

However, I suggested that today we are already in the third period - synergy era. Now investor relations is not focused on advocacy, but rather on understanding: the goal of the investor relations function is the improved understanding of the company and its business model among investors and analysts. This investor relations does not try to achieve a "high" value of stock but tries to achieve a "fair" value of stock.

Here is the summary of my review of the investor relations history.