How Behavioural Finance can be used for Key Account focused Investor Relations Activities

Traditional finance theory assumes that investors are rational, markets are efficient and that prices reflect all available information and only change due to new information. However, the results of a survey conducted among IR managers show that a majority of companies can identify characteristics of irrational behaviour of investors. Behavioural finance (BF) tries to explain this irrational behaviour by use of psychological findings.
Currently, most investor relations managers do not actively incorporate behavioural finance in their investor relations approaches. This research project by Sonja Leise focuses on the question whether the knowledge of behavioural finance can help investor relations managers to approach their key investors more effectively. The author used secondary literature as well as primary research to draw interesting conclusions. Furthermore, investor relations and behavioural finance are defined and links between both topics are identified. This research project is now published by Deutscher Investor Relations Kreis (DIRK) e. V. as part 3 of the research series and points out why and how behavioural finance could be useful for key account focused investor relations activities.